Washington, D.C. — Despite fluctuating markets over the past year, individual investors remain confident in investing in U.S. companies that are publicly traded and in audited financial information according to the “Main Street Investor Survey,” the Center for Audit Quality’s (CAQ) fourth annual survey of the investing public.
For the third year in a row, 75 percent 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 percent, unchanged from last year. Roughly half (48 percent) of investors say they had changed their investment behavior in the previous six months in reaction to the economy, down from 61 percent in 2009.
Investor confidence in capital markets declined somewhat, with confidence in U.S. capital markets dropping from 73 percent in 2009 to 68 percent 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 percent.
“The four years in which we have surveyed individual investors have coincided with a major economic crisis,” said CAQ Executive Director Cindy Fornelli. “While investors are concerned with the performance of the markets, they continue to have confidence in public companies and their audited financial statements.”
When asked who does the best job of protecting their interests aside from themselves, one third of investors (32 percent) cite public company auditors as their first or second choice, with 16 percent of respondents selecting auditors as the single group that does the best job.
The newly-enacted Wall Street Reform and Consumer Protection Act includes an exemption for companies with market capitalization of less than $75 million from compliance with Section 404(b) of the Sarbanes-Oxley Act. Almost two-thirds (65 percent) of investors are 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. Even more investors are troubled about the possibility of larger companies being exempted: four out of five investors say they would be concerned should Congress expand this exemption to companies with market capitalization of $75 million or more.
The telephone survey of 1,001 investors was conducted July 14-22, 2010 by The Glover Park Group. The margin of error was +/-3 percent. Investors were defined as those with investments valued at $10,000 or more. The survey summary and the complete questionnaire are posted on the CAQ’s Web site.
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The Center for Audit Quality (CAQ) is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high quality performance by public company auditors, convenes and collaborates with other stakeholders to advance the discussion of critical issues requiring action and intervention, and advocates policies and standards that promote public company auditors’ objectivity, effectiveness and responsiveness to dynamic market conditions. Based in Washington, D.C., the CAQ is affiliated with the American Institute of Certified Public Accountants. For more information, visit www.thecaq.org.