Page 157 - Initial Public Offering - An Introduction to IPO on Wall Street

The following are the characteristics of institutional investors:

 It is always a legal entity and it should be known that an institutional investor is a fund-
managing enterprise (e.g. a mutual fund), but not the mutual fund itself
 The institutional investor's operation is professional and it manages assets based on the
needs and priorities of its clients
 A large number of funds are always managed by an institutional investor

Risks in Institutional Investing

It's really important to consider the risks that institutional investors face. Their issues can be
categorized as follows:

 Continuous risks of non-compliance with shareholders' legal protections. These include a
shortage of trained skilled assessors and a lack of a consistent and clear dividend payment
policy
 Issues with the management system and officials' organization of work. Analysts and
managers are formally hired, and there is no template for assessing the quality of their work.
Such issues are also evident in other areas, such as marketing and upper management

Impact of Institutional Investors

Institutional investors also referred to as market makers, have a significant impact on the price
movements of various financial instruments. The presence in the economy of major financial
groups has a positive impact on the overall market situation.

The involvement of institutional investors as shareholders is believed to strengthen corporate
governance, as all stakeholders benefit from the oversight of financial markets. Moreover,
institutional investors have access to a range of investment tools that are not open to private
investors and they know how to leverage them.

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