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What investors want to see

The idea that “image is everything” doesn’t hold much weight with investors, who are keenly interested in what a company is able to deliver and its plans for the future.

Crafting a winning product or service and a strategy for the long term is the best way for a company to influence investors, a new survey shows.

More than half (57%) of the respondents to the Center for Audit Quality’s 11th annual Main Street Investor Survey said the product or service provided by a company affects their investment decisions a lot. Almost as many (56%) respondents said the company’s long-term strategy influences their investment decisions a lot.

Actions by the CEO (47%) and human rights and fair labour practices (39%) also figure prominently in investors’ decisions and behaviour.

Meanwhile, investor confidence in US capital markets and US public companies rose to a record high for the 11-year period represented in the survey. Eighty-five per cent of respondents said they have at least some confidence in US capital markets, surpassing the previous high of 84% from 2007, before the financial crisis.

Eighty-three per cent of investors said they have at least some confidence investing in US public companies, up from the previous record of 81% set in the 2016 survey.

It appears, though, that investing decisions and behaviour over the next year will be at least somewhat dependent on political issues in Washington. The top five answers for issues that will affect investing decisions a lot were:

  • Actions taken by the White House (45%).
  • Actions taken by the US Congress (44%).
  • Changes to US tax policy (43%).
  • Cyberattacks targeting personal financial information or the capital markets (42%).
  • Rising cost of health care (42%).

Asked to name the greatest risk to the US economy, 17% of respondents cited the growing national debt, 15% said cyberattacks targeting personal financial information or the capital markets, and 13% chose global political unrest.

“Investors place strong trust in America’s market system, while also having high expectations and closely watching policy debates in Washington,” CAQ Executive Director Cindy Fornelli said. “The administration and Congress should heed our survey’s list of investor concerns, which is topped by the growing national debt and the threat of cyberattacks on the financial markets.”

The CAQ is affiliated with the American Institute of CPAs.

In addition, the survey revealed that:

  • More than half (54%) of investors have at least some confidence in markets outside the US, a sharp rise from 42% the previous year.
  • Seventy-eight per cent of investors said they are confident in audited financial information issued by publicly held companies, up from 75% in 2016.
  • Investors expressed confidence in the ability of external auditors (84%), audit committees (82%), and stock exchanges (82%) to protect investors.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a CGMA Magazine editorial director.