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Shareholder value: What motivates Australian retail investors

What motivates Australian retail investors

According to a report by KPMG’s research team, KPMG Acuity, the majority of Australian retail investors would accept lower financial returns if it meant companies they invested in always behaved ethically towards customers, employees, and community.


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Shareholder Value: Shareholder Values

The KPMG report entitled Shareholder Value: Shareholder Values is based around a nationwide survey of 1,510 Australian retail shareholders. The research looks into what motivates retail investors and has found that retail investors have a heightened level of awareness and focus on the importance of reputation, transparency, ethical behaviour, values, and social responsibility.

Key findings

  • Transparency and honesty (51 percent rate this as a top five factor for investing, out of a possible 22 factors) is more sought after than any other factor aside from returns (60 percent).
  • Lower financial returns would be accepted by most investors (57 percent) if a company always acted ethically towards customers, employees and the community. A higher number (72 percent) rated ‘reputation’ ahead of ‘recent dividends’ (69 percent) when deciding which companies to invest in.
  • Executive pay is a major trigger for selling. While paying leadership and executives fairly does not drive shareholders to purchase shares (only 10 percent rank this in their top five), excessive leadership pay will drive them to sell (38 percent rank this in their top five).
  • Philanthropic support for charities and causes is no substitute for integrated values. Retail investors are not especially impressed by one-off initiatives to ‘do the right thing’. Philanthropic efforts can and should continue, but they will deliver greater impact if tightly aligned with an organisation’s broader positive purpose.
  • Age is relevant. Young investors are more likely to care about ‘trust’ factors (such as environment, ethics, values, good treatment of employees) in their investment decisions; while middle-aged investors are likely to care the least. For example, 66 percent of investors aged under 30 cited ‘ethical behaviour’ as an important factor, while just 49 percent of those aged 41-50 agreed – and, interestingly, 55 percent of over 60s agreed. Young investors are significantly more likely to consider environmental concerns than other age groups.
  • Women are more likely to prioritise trust factors. On many (but not all) factors, women shareholders are more likely to care about ethical behaviour (70 percent v 62 percent male), environmental sustainability (52 percent v 37 percent male), and whether companies in which they invest are paying their fair share of tax (70 percent v 59 percent male).
  • Investors do read annual reports (89 percent). And they’re not just looking at financial performance. Future strategy (95 percent), Board and Executive remuneration (89 percent) and CEO/Chair Messages (88 percent) are the next priority reading areas for retail investors.

About this report

KPMG Acuity conducted a nationwide online survey of 1,510 Australian retail shareholders between March and April 2019, asking them about what is important to them when making investment decisions. Respondents were sourced from a commercial third party panel provider. All respondents had been personally trading or selecting investments within the last year. The key findings from the data were then summarised in this report – with relevant KPMG leaders additionally contributing short think pieces about the implications for their area of expertise.

©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.

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