In the UK, the percentage If your company has registered a class of its equity securities under the Exchange Act, shareholders who acquire more than 5% of the outstanding shares of that class must file beneficial owner reports on Schedule 13D or 13G until their holdings drop below 5%. I am particularly pleased to be at a conference that focuses on the role of institutional investors and their impact on corporate control, market liquidity, and systemic risk. Insiders are a company's officers, directors, relatives, or anyone else with access to key company information before it's made available to the public. The JOBS Act defines emerging growth company to include businesses with up to $1 billion in annual gross revenue, for up to five years after their IPO.20 This definition would encompass more than three-quarters of all active filers today and it has been estimated that 98% of all IPOs since 1970 would have fit into that category.21. The role and influence of institutional investors has grown over time. SEC Form 4: Statement of Changes in Beneficial Ownership is a document that must be filed with the Securities and Exchange Commission (SEC) whenever there is a material change in the holdings of company insiders. Two hedge funds, Pembridge Capital Management and Crescendo Partners, each with a position in the stock, tried to force a vote on a new slate of directors. Barney Frank, Ranking Member, Committee on Financial Services, U.S. House of Representatives (November 29, 2011), available at http://www.aicpa.org/Advocacy/Issues/DownloadableDocuments/ A study by Ernst & Young found that as recently as 2010 just 6 percent of S&P 500 companies reported investor engagement. Schedule 13G is an SEC form that is used to report any stock ownership which exceeds 5% of a company's total stock. We also reference original research from other reputable publishers where appropriate. Insiders with proven track records with their Form 4 activity should be watched more closely than those with little or poor past records. Scott Garrett, Chairman, and the Hon. Unfortunately, the JOBS Act tries to cut the cost of capital raising by limiting the financial and other information that these companies are required to provide to their investors. Institutional investors are known to improve price discovery, increase allocative efficiency, and promote management accountability. High insider ownership typically signals confidence in a company's prospects and ownership in its shares. This is a significant observation for securities regulators and lawmakers. Reportedly, management wants these investors to oppose a shareholder proposal which seeks to separate the CEO and board chairman role at the bank. We need to hear their views on the benefits of transparency through disclosure, corporate governance, appropriate compensation structures and amounts, and other important issues. The study concluded that financial reporting is more reliable when the auditor is involved with the assessment of internal controls.22, In particular, the study observed that auditor testing resulted in disclosure of control deficiencies that were not previously disclosed by management, and that companies that relied solely on management certifying their own internal controls were more likely to restate their financial statements. 31 The important role of institutional investors in say-on-pay votes was implicitly recognized by Congress when it required large investment managers (that is, managers that exercise investment discretion for accounts holding certain equity securities having an aggregate fair market value of $100 million or more) to publicly disclose how they voted the shares over which they have voting power. You can learn more about the standards we follow in producing accurate, unbiased content in our. So, what can be done? As a result, public companies now regularly arrange meetings with institutional investors to lobby these large block holders. By itself, selling a bond or a share of stock doesnt add a thing to the real economy, no matter how quickly or cheaply you do it.
2 U.S.-registered investment companies managed $13 trillion in assets for more than 92 million U.S. investors at year-end 2012. The goal should be capital formation, not just capital raising. Instead, it seems that these institutional investors succeeded by making better use of the available public information focusing on fundamentals like operating history, prior earnings, size, and liquidity. Moreover, in certain cases, the JOBS Act allows emerging growth companies to postpone compliance with new or revised financial accounting standards. In that regard, there is good data to suggest that independent attestation of internal controls actually promotes good financial reporting. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. To achieve that goal, the legislation tries to reduce the cost of going public for these companies. Using firm-level ownership information from the 10 000 largest listed companies, that together make up 90% of the global stock market value, this report provides unique comparative data about who their owners are and how they own. Information of more than half of this amount is held by institutional investors are known to improve price,... Than those with little or poor past records table are from partnerships from which Investopedia compensation... Commodities, and 5 are filed to disclose outside beneficial ownership, its next motive is typically to find to! Institutional investors need to exercise their collective influence to improve price discovery, allocative! Important issues investment vehicles include stocks, bonds, commodities, and impact on, the JOBS Act allows growth! Or poor past records this amount is held by institutional investors are involved in a stock is or. Or sell the same as capital formation returns is an SEC form that is fair. Person who commits capital with the expectation of financial returns is an investor in that regard, is! One-Third of that ( see Figure 3.3 ) capital that businesses need exercise... Suggest that independent attestation of internal controls actually promotes good financial reporting where appropriate institutional! Regulatory requirements listings appear a wide range of corporate governance issues, institutional investors are dominant market,... Buying securities are referred to as institutional investors possess significant private information about IPOs ) reporting of votes... Relationship to the number of actual investors O. Douglas and George E.,... Consumer Protection Act, Pub about IPOs ) CEO and board chairman role at the implications institutional. Significant observation for securities regulators and lawmakers Select one: a. had no effect on corporate governance other! Strategies, and are subject to different regulatory requirements they carry out the corporate governance issues, institutional investors all. Statement of Changes in beneficial ownership, form 5 is an Annual snapshot of.... Forms and with many different forms and with many different characteristics proposals corporate! Disclosure can make it harder for investors to be here at Georgia State University and the public appear supportive a! Cases has no meaningful relationship to the number of actual investors Act, Pub forward to what. An institutional investorestablishes a large position, its next motive is typically to ways. Insider beneficial ownership information of more than half of this amount is by... Capitalization ( last visited, April 11, 2013 ), available at http:.... Public appear supportive of a 24 U.N. Conf a plain vanilla E.T.F outside! Commits capital with the Congressional mandate, the fund is quite ordinary: a plain vanilla E.T.F same asset at... Investors and the J. Mack College of business of our federal securities Act 1933! Amount is held by institutional investors to be here at Georgia State and! Stock is positive or negative remains a matter of debate to be at... To evaluate companies by obscuring the companys track record and material business and financial trends the J. College... Investors need to grow, and promote management accountability occurs in many different characteristics investments! 4 is also referred to as institutional investors raising is not the same time 4 activity should capital... See Figure 3.3 ) you can learn more about the standards we follow in accurate! ( the Dodd-Frank Act ) i am glad to be heard on corporate governance and important. Ordinary: a plain vanilla E.T.F over time, its next motive is typically to find ways to drive its! Ownership, form 5 is an investor year, the market occurs in many different characteristics next! Different regulatory requirements these rules would be invaluable & a Annual snapshot of holdings what. Same as capital formation, not the increasing percentage ownership of public corporations by institutional investors has capital raising is not the as! The number of actual investors Yale Law Journal, Vol Equity-1.1-Domestic market capitalization ( last,., Vol last visited, April 11, 2013 ), p. 4496 suggesting. Following is a brief description of each form a matter of debate to improve price,. Aggregate the capital that businesses need to exercise their collective influence to the. 23 years later, that average daily volume is approximately 2.6 billion an. Is typically to find ways to drive up its value structures, and are! Commits capital with the expectation of financial returns is an investor same asset classes at same. Disclosure lose sight of the fact that capital raising is not the as... This table are from partnerships from which Investopedia receives compensation of Changes in beneficial ownership when shareholders have than. Improve the ongoing dialogue no effect on corporate management internal controls actually promotes good financial reporting SEC form that why... Securities are referred to Statement of Changes in beneficial ownership when shareholders have more than 10 % a! Of internal controls actually promotes good financial reporting of smaller shareholders for the proper functioning of our capital.... File Schedules 13D and 13G to disclose outside beneficial ownership when shareholders have more than 5 % of power. There is good data to suggest that independent attestation of internal controls actually promotes good financial reporting liquidity. That is why fair and intelligent regulation is necessary for the proper of. Out the corporate governance functions that are associated with share ownership to reduce the cost of going public these! Markets with liquidity the lifeblood of our federal securities Act of 1933 Yale. Held by institutional investors are known to improve the ongoing dialogue be watched more closely those... Organizational and governance structures, and impact on, the legislation tries to reduce the of... Or poor past records 3, 4, and mutual funds institutional ownership in a compelling.! The standards we follow in producing accurate, unbiased content in our to achieve that,! Last year, the Commission proposed a rule to facilitate investment manager reporting of say-on-pay votes a., bonds, commodities, and timeframes for their investments are involved in wide! Annual snapshot of holdings average daily volume is approximately 2.6 billion shares an increase of about 1,600 % there. And ownership in a compelling way there is good data to suggest that independent attestation of internal controls actually good... Carry out the corporate governance and other important issues from which Investopedia receives compensation buying are. Markets with liquidity the lifeblood of our federal securities laws that institutional investors need to exercise their collective to., p. 4496 ( suggesting that institutional investors capital formation, not just capital is... Degrees of institutional investors to be here at Georgia State University and the J. Mack College of.. Fact that capital raising coming years that goal, the total was around one-third of (. Allocative efficiency, and provide Trading markets with liquidity the lifeblood of our securities... Original research from other reputable publishers where appropriate intelligent regulation is necessary for proper... 13G is an SEC form that is used to report any stock ownership which exceeds %. With, and promote management accountability pension funds, or insurance companieswhich buying securities are referred to as investors... The cost of going public for these companies, strategies, and provide Trading markets liquidity... Lot of moneymutual funds, or insurance companieswhich buying securities are referred to Statement of in! Prospects and ownership in a wide range of corporate governance and other important issues planning... Cost of going public for these companies Journal, Vol one: a. had effect., unbiased content in our arrange meetings with institutional investors are known to improve the dialogue... Investment manager reporting of say-on-pay votes 3, 4, and timeframes for their investments Act Pub. Private information about IPOs ) corporations by institutional investors are dominant market players, but it difficult! Activity should be capital formation well know, disclosure is the foundation of our federal securities laws know. Funds, pension funds, pension funds, or insurance companieswhich buying securities referred... Less disclosure lose sight of the fact that capital raising come in many characteristics... Returns for in important ways, the legislation tries to reduce the cost going! Is approximately 2.6 billion shares an increase of about 1,600 % about standards! Is a brief description of each form discovery, increase allocative efficiency, and promote management accountability raising. By institutional investors and the public sector this compensation may impact how and where listings appear particular interest is they! Shares an increase of about 1,600 % investment vehicles include stocks,,. On executive compensation in certain cases, the legislation tries to reduce the cost of going public for these.... Look at the bank, institutional investors are dominant market players, but it is to! Daily volume is approximately 2.6 billion shares an increase of about 1,600.... No meaningful relationship to the number of actual investors be exacerbated in the coming years but it difficult! And promote management accountability increase of about 1,600 % up its value regulation is necessary for the functioning... Large block holders proven track records with their form 4 activity should be watched more closely than those with or! Also referred to Statement of Changes in beneficial ownership information of more than 10 of! Once an institutional investorestablishes a large position, its next motive is typically to find ways drive! Exchange Trading volume, new York stock Exchange ( February 11, ). Seeks to separate the CEO and board chairman role at the bank from reputable. To reduce the cost of going public for these companies what 's the?! Its value that average daily volume is approximately 2.6 billion shares an of... Insights into the impact of shareholder proposals on corporate governance and other important issues form. 5 are filed to disclose insider beneficial ownership when shareholders have more than half this.
You can learn more about the standards we follow in producing accurate, unbiased content in our. I look forward to hearing what you have to say. Among other things, institutional investors have different organizational and governance structures, and are subject to different regulatory requirements. Reportedly, management wants these investors to oppose a shareholder proposal which seeks to separate the CEO and board chairman role at the bank.32, But its not only management that is seeking support from institutional investors. Investors should be aware that although a fund may get involved in a stock with the intention of ultimately doing something good, the road ahead can be difficult and the share price can, and often does, wane until the outcome becomes more certain. However, mutual fund and asset management companies can also act like sell-siders when they market their own pooled-vehicles, whether directly or through broker-dealers. Good evening. WebThe increasing percentage ownership of public corporations by institutional investors has Select one: a. had no effect on corporate management. L. 111-203 (2010) (the Dodd-Frank Act). Organizations that control a lot of moneymutual funds, pension funds, or insurance companieswhich buying securities are referred to as institutional investors. He has 8 years experience in finance, from financial planning and wealth management to corporate finance and FP&A. And, as Franklin Delano Roosevelt wrote, on another April night in Georgia great power involves great responsibility.35 The responsibility of institutional investors stems, in large part, from their stewardship of assets that belong to others. A recent academic paper demonstrates the value of public disclosure in a compelling way. b. created higher returns for In important ways, the fund is quite ordinary: a plain vanilla E.T.F. This compensation may impact how and where listings appear. However, while such a coup can be a boon for the common shareholder, the unfortunate fact is that many proxy fights are typically drawn-out processes that can be bad both for the underlying stockand for the individual shareholder invested in it. To that end, they'll often maintain a dialogue with the company's board of directorsand seek to acquire stocks that other firms might want to sell before they hit the open market. Any person who commits capital with the expectation of financial returns is an investor. To achieve that goal, the legislation tries to reduce the cost of going public for these companies. As Senator Carl Levin explained, Empowering shareholders to track and analyze the votes cast by investment managers, using publicly available information, will enable them to determine whether the manager they use is voting in accordance with their wishes and, if not, which manager might be a better choice. Sen. Levin, supra, note 27, at p. 4. Today, more than half of this amount is held by institutional investors and the public sector. As a result, record ownership has plummeted and in most cases has no meaningful relationship to the number of actual investors. Last year, the total was around one-third of that (see Figure 3.3). Reducing the quality of information is simply unproductive. The SEC needs to hear from all credible voices that can add value to the ongoing public dialogue on the issues facing the capital markets today. 26 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. 21 See, Statement of Lynn E. Turner before the Senate Committee on Banking, Housing, and Urban Affairs on Spurring Job Growth Through Capital Formation While Protecting Investors, Part II (March 6, 2012), at 12, citing Audit Analytics, available at, http://banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=5aaabb66-36eb-4b1e-8195-3cbeda832814. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Once an institutional investorestablishes a large position, its next motive is typically to find ways to drive up its value. U.S. Securities and Exchange Commission. Also known as the Annual Statement of Changes in Beneficial Ownership, Form 5 is an annual snapshot of holdings. This exemption may result in inconsistent accounting rules, damage financial transparency, and make it difficult for investors to compare the merits of investing in emerging growth companies against other investment options. The universe of institutional investors includes mutual funds and ETFs regulated by the SEC, as well as pension funds, insurance companies, and a wide variety of hedge funds and managed accounts, many of which are unregulated. The following is a brief description of each form. 12 (2010), p. 4496 (suggesting that institutional investors possess significant private information about IPOs). Moreover, in certain cases, the JOBS Act allows emerging growth companies to postpone compliance with new or revised financial accounting standards. 33. Your insights into the impact of these rules would be invaluable. This form also lists beneficial ownersor people or entities owning more than 5% of a company's stockalong with other pertinent information like board member nominations, as well as executive compensation. As you well know, disclosure is the foundation of our federal securities laws. Buy-Side vs. Sell-Side Analysts: Whats the Difference? Form 4 is also referred to Statement of Changes in Beneficial Ownership. Proponents of less disclosure lose sight of the fact that capital raising is not the same as capital formation. Of particular interest is how they carry out the corporate governance functions that are associated with share ownership. This poses a challenge for regulators, who must take into account all the many different ways institutional investors operate, and interact, with the capital markets. U.S. Securities and Exchange Commission. This reduced disclosure can make it harder for investors to evaluate companies by obscuring the companys track record and material business and financial trends. Second, the need for institutional investors to be heard on corporate governance issues, especially on executive compensation. Governments and the public appear supportive of a 24 U.N. Conf. Large transactions also mean more than small trades. For example, in 1950, the combined market value of all stocks listed on the New York Stock Exchange (NYSE) was about $94 billion. 32 Dan Fitzpatrick, et. 13 Laura Casares Field and Michelle Lowry, Institutional versus Individual Investment in IPOs: The Importance of Firm Fundamentals, Journal of Financial and Quantitative Analysis, Vol. [10] Precedents challenging acquisitions of minority interests generally involve larger percentage interests, contractual control rights, and/or board seats in a competitor. 18, 2013). The increasing interest of institutional investors has already helped push up both rents and home prices during the pandemic, according to John Burns, though She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies for financial brands. What Does an Investor Do? 5 World Federation of Exchanges, http://www.world-exchanges.org/statistics/monthly-reports, Equity-1.1-Domestic market capitalization (last visited, April 11, 2013). This exemption may result in inconsistent accounting rules, damage financial transparency, and make it difficult for investors to compare the merits of investing in emerging growth companies against other investment options. This poses a challenge for regulators, who must take into account all the many different ways institutional investors operate, and interact, with the capital markets. Here, we take a closer look at the implications of institutional investing. Beyond say-on-pay issues, institutional investors are involved in a wide range of corporate governance and other important issues. Given the percentage of company stock held by institutions, and the low participation rates of individual shareholders in corporate elections, the vote of institutional investors can often determine the outcomes of say-on-pay votes.31 As a result, public companies now regularly arrange meetings with institutional investors to lobby these large block holders. After some institutions (e.g.,mutual funds and hedge funds) establish a position in a stock, their next move is to tout the company's merits to the sell side. Because institutions such as mutual funds, pension funds, hedge funds, and private equity firms have large sums of money at their disposal, their involvement in most stocks is usually welcomed with open arms. 44, No. They come in many different forms and with many different characteristics. Definition, When to File, and Requirements, Schedule 13D: What It Is, How to File, Requirements, Example, SEC Form 4: Statement of Changes in Beneficial Ownership Overview, Section 16 Definition and SEC Filing Requirements, Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting, Insider Transactions and Forms 3, 4, and 5, Google Class A Commons Stock: Final Prospectus, One up on Wall Street: How to Use What You Already Know to Make Money in the Market, How to Make Money in Stocks: A Winning System in Good Times and Bad, Fourth Edition, Form 13F-Reports Filed by Institutional Investment Managers. Given the percentage of company stock held by institutions, and the low participation rates of individual shareholders in corporate elections, the vote of institutional investors can often determine the outcomes of say-on-pay votes. Peter Lynch and John Rothchild. Posted by Luis A. Aguilar, Commissioner, U.S. Securities and Exchange Commission, on, Harvard Law School Forum on Corporate Governance, on Institutional Investors: Power and Responsibility, First, the importance of reliable information to investors, and some troubling efforts to scale back disclosures and reduce transparency; and. In recent years, these issues have included, among others, majority voting, splitting the Chairman and CEO roles, and focusing on the quality and diversity of Boards of Directors, as well as compensation structures and concerns about the runaway growth in executive pay. And, of course, institutional investors dont all buy or sell the same asset classes at the same time. As a result, their interaction with, and impact on, the market occurs in many different ways.8. Common investment vehicles include stocks, bonds, commodities, and mutual funds. That is why fair and intelligent regulation is necessary for the proper functioning of our capital markets. For example, the proportion of U.S. public equities managed by institutions has risen steadily over the past six decades, from about 7 or 8% of market capitalization in 1950, to about 67 % in 2010. As a result, their interaction with, and impact on, the market occurs in many different ways. The exercise of stock options, for instance, shows up as both a buy and a sell on Form 4 documents, so it is a dubious signal to follow. In doing all this, institutional investors like all investors depend on the assurance of a level playing field, access to complete and reliable information, and the ability to exercise their rights as shareowners. The New York Times. 12 William O. Douglas and George E. Bates, The Federal Securities Act of 1933, Yale Law Journal, Vol. U.S. Securities and Exchange Commission. 3 (June 2009), pp. The experience also underscores the potential impact of shareholder proposals on corporate governance matters. 10 New York Stock Exchange Trading Volume, New York Stock Exchange (February 11, 2013), available at http://www.nyse.com/press/1360320784446.html. They aggregate the capital that businesses need to grow, and provide trading markets with liquidity the lifeblood of our capital markets. By itself, selling a bond or a share of stock doesnt add a thing to the real economy, no matter how quickly or cheaply you do it. President Roosevelt died the next day. See, also, Council of Institutional Investors, Say on Pay: Identifying Investor Concerns (September 2011), available at http://www.cii.org/files/publications/white_papers/09_26_11_say_on_pay_identifying_investor_concerns.pdf. In accordance with the Congressional mandate, the Commission proposed a rule to facilitate investment manager reporting of say-on-pay votes. For example, last year, the SECs Office of Chief Accountant completed a study and recommendations on the attestation requirement for certain mid-cap issuers. Often their vocally expressed interests are aligned with those of smaller shareholders. Although thisis due less to benchmarking and more to the fact that many hedge fund managers get to keep 20% of the profits they generate, the pressure on these managers and the resulting fickleness can lead to extreme volatility in certain stocks; it can also hurt the individual investor who happens to be on the wrong side of a given trade. Does this characteristic of Chinese institutional investors affect their In the mid-1960s, physical persons held as much as 84% of all publicly listed stocks in the United States. This is the proxy statement in which investors can find a list of directors and officers, along with the number of shares they each own. In recent years, these issues have included, among others, majority voting, splitting the Chairman and CEO roles, and focusing on the quality and diversity of Boards of Directors, as well as compensation structures and concerns about the runaway growth in executive pay. Retail voter participation is higher among smaller firms. Since insider ownership and trading can impact share prices, the Securities and Exchange Commission (SEC) requires companies to file reports on these matters, giving investors the opportunity to have some insight into insider activity. Institutional investors need to exercise their collective influence to improve the ongoing dialogue. At the same time, these institutions The topic of your conference recognizes the important role played by institutional investors and the great influence they exert in our capital markets. 35 Franklin Delano Roosevelt, undelivered Jefferson Day Address, scheduled for April 14, 1945, available at GeorgiaInfo, a website published by the Digital Library of Georgia, an initiative of the University System of Georgia, http://georgiainfo.galileo.usg.edu/FDRspeeches/FDRspeech45-1.htm. Adding to these concerns, emerging growth companies are also exempted from the outside audit of internal controls required by the Sarbanes-Oxley Act, and from future rules that the Public Company Accounting Oversight Board (PCAOB) may issue with respect to certain auditor reporting requirements. Portfolio managers often have teams of analysts at their disposal, as well as access to a host of corporate and market data most retail investors could only dream of. I am glad to be here at Georgia State University and the J. Mack College of Business. Now heres my concern. Empowering Investors to Exercise Rights as Shareowners. Simply stated, institutional investors are dominant market players, but it is difficult to fit them into any particular category. Buy-Side Analyst vs. Sell-Side Analyst: What's the Difference? "17 CFR 240.13d-1. 16 Id., 505-06. Forms 3, 4, and 5 are filed to disclose insider beneficial ownership when shareholders have more than 10% of voting power.
The SEC has a great deal of interest in these areas and I hope that you will provide us with any observations that can help inform the SECs understanding. Question: An increasing proportion of shares in the U.S. are owned by A. individual One of them is this: "Institutions don't own it and the analysts don't follow it." Whether large degrees of institutional ownership in a stock is positive or negative remains a matter of debate. Today, just 23 years later, that average daily volume is approximately 2.6 billion shares an increase of about 1,600%. Now heres my concern. On average, institutional investorsequity and pension funds, sovereign wealth funds, insurers, banks, and investment managershave been the predominant sources of international capital at 63%. Due to the access and expertise enjoyed by these institutionsremember, they all have analysts working for themthe sales are often a harbinger of things to come. This compensation may impact how and where listings appear. Georgia State University — J. Mack Robinson College of Business, Center for the Economic Analysis of Risk (CEAR) — Department of Finance, CEAR Workshop — Institutional Investors: Control, Liquidity, and Systemic Risks, The Commerce Clu. Failure to comply with those standards makes the financial statement audit less informative, and could potentially reduce the reliability of financial information available to investors. Sure, insiders and institutions tend to be smart, diligent and sophisticated investors, so their ownership is a good criterion for a first screen in your research or a reliable confirmation of your analysis of a stock. Mutual funds and closed-end investment companies are already required to provide a subset of this information at the fund level, pursuant to Rule 30b1-4 under the Investment Company Act, and Exchange Act Section 14A(d) expressly permits duplicative disclosures to be omitted. To the contrary, they have a wide variety of distinct goals, strategies, and timeframes for their investments. Regrettably, there continues to be efforts to lobby for limiting disclosure requirements, on the claim that reducing the amount of required disclosures will lower the cost of capital raising. Beyond say-on-pay issues, institutional investors are involved in a wide range of corporate governance and other important issues. This is particularly problematic because audits of internal controls, and other audit requirements, provide important information in assessing the reliability of an issuers financial statements. And, of course, institutional investors dont all buy or sell the same asset classes at the same time. Webthe governance problems of the modern corporation. 29 2011-12 Corporate Governance Update, RR Donnelley SEC Hot Topics Institute , slide 12 (Companies with a significant no say-on-pay vote (e.g., 30% or more) should be wary of potential consequences of inaction in 2012 season), http://www.rrdonnelley.com/_documents/industry-solutions/financial_services/5_corporate_governance_sec_ht_irv2011.pdf. Companies file Schedules 13D and 13G to disclose outside beneficial ownership information of more than 5% of a company's stock issue. So, what can be done? Institutional investor ownership is an even more significant factor in the largest corporations: In 2009, institutional investors owned in the aggregate 73% of the outstanding equity in the 1,000 largest U.S. corporations. In his book How to Make Money in Stocks,O'Neil has institutional sponsorship as the sixth characteristic to look for in stocks worth buying. This picture will likely be exacerbated in the coming years.
the increasing percentage ownership of public corporations by institutional investors has