Values are driving the decision-making of Australian retail investors, according to KPMG.
Latest findings from the global consultancy's research arm KPMG Acuity show Australian retail investors are more concerned about values than perhaps was previously understood, with transparency and honesty rating as a top five factor for investors considering becoming shareholders of a company.
According to the firm's Shareholder value: Shareholder values report, transparency and honesty rank in the top five factors for investors from a field of 22, and aside from returns are more sought after than any other factor.
The research also reveals more than half of Australian investors would accept lower financial returns if a company always acted ethically towards customers, employees and the community.
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While recent dividends were considered extremely or very important for 69% of people when determining whether they should invest in a company, reputation was considered more important at 72%.
The research also found retail investors were not wooed by companies sponsoring or supporting charities, sports teams or culture and arts alone.
According to KPMG's findings, those initiatives need to be tightly aligned with an organisation's "broader positive purpose" to make a greater impact in the minds of investors.
Amanda Hicks, head of KPMG's customer, brand and marketing practice said the research demonstrates how important values are to Australian investors.
"What this new research makes clear for the first time is Australian retail investors are now keenly aware of the importance of reputation, transparency, ethical behaviour, values alignment, and social responsibility," Hicks said.
"This is a hugely significant finding, because it reinforces just how complex the idea of 'shareholder value' is in the modern era.
"Australian investors are not looking for directors and management with a laser focus on short-term returns. They expect more of corporate leadership and will shift their investment elsewhere if they don't get it."
However, the research revealed went further than what attracts retail investors, and also revealed what turns them off.
Executive pay was found to be a "major trigger" for selling shares in a company, with excessive leadership pay found to be a top five reason to sell shares. Paying leadership and executives fairly ranked much lower though, with just 10% of investors ranking it among their top five reasons for buying in.
KPMG remuneration consulting partner Stephen Walmsley said companies need to take careful note of the findings around executive pay.
"Concerns about remuneration have become a real lightning rod among shareholders for broader governance and performance concerns, a dynamic unlikely to change in the foreseeable future," Walmsley said.
"Retail investors, along with powerful institutional investors such as industry superannuation funds, have put executive remuneration squarely in the crosshairs."