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1. Introduction
In the twentieth century, stock markets had become an increasingly important institution in economies. A key feature of the exchange-listed companies is that professional managers run the corporations owned by shareholders, which can freely enter or exit as financiers. From the late 1970s, the seminal work of Jensen and Meckling (1976) has strongly influenced the societal perceptions of the roles of managers and financiers in the Western world. Jensen and Meckling depart from the corporation as the dominant organizational form for large-scale business, where managers are hired as agents by shareholders acting as principals. From this principal–agent framework, where managers may act in their own interests, which are only partially aligned with shareholder interests, an awareness has grown among shareholders about the fiduciary duties of professional managers (Davis and Thompson, 1994; Useem, 1996; Bendickson, Muldoon, Liguori and Davis, 2016).
The agency logic has been often-debated from the perspective of strategic decisions (Jensen, 1986), corporate governance (Shleifer and Vishny, 1997) and financial reporting (Healy and Palepu, 2001). However, less known is that firms have responded to the increased demand for information by investors, and in particular shareholders, with the inception of the investor relations function (Bassen et al., 2010). The investor relations function emerged with the evolution of the capital market, as was first seen in the USA in the 1960s, when brokers initiated commercial sessions for analysts and investors. After its inception, the importance of the investor relations function significantly increased in the 1980s, when the active takeover market demanded that corporate managements be concerned about their share prices and communicate the credibility of their vision and strategy to the investing public. Booming capital markets jointly with demanding shareholders and potential investors provided fertile soil for growth of the investor relations function (Silver, 2004, p. 70), and in particular, the threat of gambling shareholder loyalty in a control contest was looming (Brennan and Tamarowski, 2000). In the 1990s, flourishing capital markets, deregulation and increasing shareholder activism further boosted the importance of the investor relations function (Marston and Straker, 2001). In particular, chief executive officers (CEOs) became important for financial markets and the demands for open dialogues increased (Westphal and Fredrickson, 2001). The role of the CEOs transitioned from one of the professional...