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Prepare for more shareholder activism, say institutions

Shareholders agreementMore than three-quarters of global institutional investors think shareholder activism will increase in the next three years and become more prevalent worldwide.

This view was most strongly held by US institutional investors, found a survey of 500 institutions and sell-side research analysts by MSLGroup, a public relations firm.

However, the targets of shareholder activists vary between regions. In Europe, 62% of investors in the survey are concerned with aligning directors' pay with corporate performance, compared with 42% in the US.

"Taken together with other findings in the report, it is becoming increasingly clear that while institutional investors around the world share certain characteristics and approaches, a one-size fits all approach to investor engagement is not optimal, as cultural and behavioural differences are becoming more transparent," says MSLGroup global financial practice leader, Roland Klein.

The survey also uncovers differing attitudes to environmental, social and governance factors. Eighty-five per cent of Asian investors considered these to be a key factor determining a company's valuation, a view shared by just 64% of US investors.

The most important non-financial factors across all investors in the survey were corporate strategy, quality of executive management and transparency of investor disclosures – each of which were chosen by more than 90% of respondents.

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