The source of a company's fund can be creditors which are the banks or the investors who are the stockholders in the firm. The funds borrowed from creditors is termed as a debt and is a liability to the company whereas the investors money is accounted as the stockholders equity and company has a smaller liability towards the investors which makes investors very important for a firm.
It is natural that when an investor invests in a firm he expects a good return for his investments and hence it is the duty of the firm to enhance the stockholders' value. But sometimes when the company is not in a good shape or a new comer it is very difficult to attract and retain investors and to fulfill this goal it needs to have a healthy relation with its investors and hence investor relations come into play.
A deterioration in investor relationship could jeopardize a company's stability and its stock position. A company would lose its current investors and would fail to attract new investors and this could sink the stock prices of the company and make its future dull.
In order to retain investor relation the company should communicate with its investors effectively through media like websites, annual reports etc. A company should update its investors about its new innovations, projects and investments.



