Real-Life Decision Making
An investor relations (IR) specialist is the bridge between the company they work for and the public, specifically the public who invests in the company's stock. Alex Singal, an IR director for a private prison company in Nashville, Tennessee, says a big part of her job is communicating company happenings to the outside world.
She takes management on the road so that they can make presentations to analysts (professionals who research a company and make recommendations to the public) so the analysts can decide whether the public should buy the company's stock.
Naturally, if you own a piece of a company, you are concerned if something goes wrong at the company. In fact, says Singal, much of her job is "hand-holding." Investors need events explained to them and want to know the history and the future strategies of the company they are investing in.
You are an IR specialist employed by Criminal Holdings, Inc. The company owns and operates 10 prisons across the country. This morning when you opened the paper, you were startled. Better County Prison had an inmate uprising. It made the front page of the major papers. You quickly swallow your breakfast and finish your coffee.
Whenever there is a prison escape or any negative event, the phones light up in your IR department. Since you are a director in that department, the employees will need your advice.
Sure enough, the phones are ringing off the hook when you arrive. Investors want to know how this could happen, and they want you to tell them. More importantly, they are concerned because Criminal Holdings Inc.'s stock price has fallen by $3 per share in the first two hours of trading.
As you understand it, the prison uprising happened at one of the prisons you only partly own.
Mr. Sharif, one of your biggest shareholders, is on the phone. He is asking to speak to you directly. Mr. Sharif owns 300,000 shares of Criminal Holdings. He has lost a lot of money this morning.
You pick up the phone and say good morning to Mr. Sharif, but he is not into niceties this morning. He begins yelling and you have to hold the phone away from your ear so that you don't go deaf. He wants to know what's going on and if he should sell his stock in the company now.
What do you do?