Executives View Ideal Shareholder Base as Key to Increased Market Value
Companies that want to maximize their market value would do well to pay attention to shareholder composition.
This study found that nearly all companies describe their ideal shareholder as having a long-term investment horizon, but that about half of companies’ shareholder base has a short- or medium-term horizon. As a result, the authors find, most companies see significant upside to managing their shareholder base, and senior leaders spend considerable time meeting with current and prospective investors.
“More than three-quarters of companies in our survey see significant stock market benefits from managing their shareholder base,” says Anne Beyer, associate professor of accounting at Stanford Graduate School of Business (GSB) and coauthor of the study. “Companies believe that if they can identify and attract the right shareholder base, they will be able to increase the price of their stock and decrease its volatility.”
In fact, this survey of 138 investor relations professionals at North American companies shows that 80% of companies believe their stock price would trade higher over a two- to three-year period if they could attract their ideal shareholder base. On average, companies estimate their stock would rise 15% and share price volatility would decrease 20%.
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