That was a key finding of a study by Greenwich Associates after talking to 91 CFOs at large US corporations, according to a news release.
The announcement said that 60% of the CFOs estimated they spend between two and five days each month dealing with investor relations.
The study found that institutional investors value such intimate gatherings highly. According to Greenwich Associates’ 2006 US Equity Investors Study, of the $4.5 billion in commissions paid out by institutional investors for equity brokerage research/sales coverage and related service from 2005 to 2006, institutions directed roughly 20% to compensate brokers for setting up meetings with company management teams.
Among the largest institutions and most active institutional investors, payments to brokers that facilitated direct access to company management made up nearly 30% of total research commission payments, the research showed.
Greenwich Associates said that with their own research and analytic capacities in place, buy-side organizations have less need than in past years for Wall Street’s ideas and recommendations. Rather, they are concentrating on getting in front of corporate management teams to pose their own questions and test their own theories.
As part of its 2006 Equity Analysts Research Study, Greenwich Associates asked institutional investors to rank their brokers in terms of effectiveness at providing direct access to company management teams. The results: Lehman Brothers and Merrill Lynch were cited as the firms that delivered the most in terms of face-time with corporate officials.