Despite fluctuating markets over the past year, individual investors remain confident in investing in publicly traded U.S. companies and in their audited financial information, according to the fourth annual “Main Street Investor Survey,” released Thursday by the Center for Audit Quality (CAQ).
For the third consecutive year, 75% of respondents in the individual investor survey said they have confidence investing in U.S. public companies. Similarly, investor confidence in audited financial information released by public companies remains strong at 70%, unchanged from last year. Roughly half (48%) of investors say they had changed their investment behavior in the previous six months in reaction to the economy, down from 61% in 2009.
“I was surprised that the numbers remained this positive for the third year in a row,” said CAQ Executive Director Cindy Fornelli at a press briefing. “The biggest drop came between 2007 and 2008, which was expected because it was when the economic crisis started.”
Investor confidence in capital markets declined somewhat, with confidence in U.S. capital markets dropping from 73% in 2009 to 68% in 2010. Confidence in capital markets outside the United States continued a decline that began in 2008, falling 10 percentage points in the past year to 47%.
When asked who does the best job of protecting their interests aside from themselves, nearly one-third of investors (32%) cite public company auditors as their first or second choice, with 16% of respondents selecting auditors as the single group that does the best job.
In response to a provision in the newly enacted Dodd-Frank Wall Street Reform and Consumer Protection Act that exempts companies with market capitalization of less than $75 million from compliance with Section 404(b) of the Sarbanes-Oxley Act, almost two-thirds (65%) of investors said they were concerned that smaller companies will not be required to have a company’s auditor attest to, and report on, management’s assessment of its internal controls.
The telephone survey of 1,001 investors was conducted July 14-22 by The Glover Park Group. The margin of error was +/-3%. Investors were defined as those with investments valued at $10,000 or more.
The CAQ, which is affiliated with the AICPA, is a Washington-based public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets.
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