Administration August 4, 2002

Institutions Largest Shareholders of Multinationals

April 8, 2002 (PLANSPONSOR.com) - An average of 61% of the total shares of most large, multinationals are owned by institutional investors, a PricewaterhouseCoopers Management Barometer finds.
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In addition, the survey found that:

  • the top 10 investors typically own 26.9% of all shares
  • the top five hold 19.3%
  • the largest own 8.6%.

Retail investors own the remaining 39% of shares.  Respondents said they would like to retain essentially the same ownership mix, 62% institutional, and 38% retail, over the next year or so.

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Who Owns What

Of all shares in the companies surveyed:

  • institutions that are value and growth investors own a total of 48.5%
  • institutional shareholders tracking an index own 7%
  • those with an income focus hold an additional 5.5%.

Results show that executives believe that institutional value and growth investors have a better understanding of their companies than institutions focused on income or various stock indices, whose charter does not require them to follow companies as closely.

Keeping informed

Overall, 88% of the sample rated institutional investors as well informed about their company’s strategy, with only 9% viewing them as not well informed.

In particular:

  • 77% saw value investors as well informed
  • 63% of growth investors were seen as well informed
  • only 38% of income investors and 32% of index investors where so deemed.

Furthermore, respondents said 72% of value investors, and 69% of growth investors have sophisticated financial models, versus only 35% of both income and index investors.

Exerting Influence

Despite this significant concentration of ownership, survey respondents believe institutions have limited influence over company strategy. In fact:

  • only 37% of surveyed executives said institutional investors exert strategic influence
  • while 26% said institutions have no impact on corporate direction
  • 34% rated them neutral.

According to surveyed executives, big institutional investors are:

  • majority shareholders in 64% of their US-based multinational companies
  • minority investors in another 22%
  • the remaining 14% are either privately held or foreign owned.

PricewaterhouseCoopers’ new “Management Barometer” is developed and compiled with assistance from BSI Global Research Inc and comprises the responses of 101 CFOs and managing directors in large multinational businesses.

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