The ideal owners for corporate financial performance
The desk posits that corporate ownership structure is pivotal for financial performance, suggesting that companies with strategic major owners yield superior long-term gains. Per the full note from Nordea, a study of 2,200 companies indicates that firms characterized by strategic ownership rather than solely institutional or state ownership are better positioned for sustainable growth and capital discipline. This insight reinforces the importance of ownership in investment decisions, as market participants consider which companies are best able to harness their ownership advantages amidst changing economic conditions.
What the desk is arguing
The ownership structure of corporations significantly influences their financial performance, with strategic owners offering the most promising outlook for long-term success. This conclusion stems from Nordea's research, which emphasizes that companies with major strategic owners maintain a balance between risk and investment, leading to superior performance metrics over time.
In Nordea's analysis, companies predominantly owned by strategic investors demonstrated stronger long-term performance, suggesting that aligning management practices with meaningful owner involvement can drive better capital efficiency and growth. In contrast, firms with institutional ownership alone often do not exhibit distinguishing performance traits, with state-owned companies showing persistent underperformance due to a lack of capital discipline.
Where it sits in our coverage
Our consensus target for this commentary aligns with a range of 1.075, with specific firm targets as follows: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This analysis diverges from bofa's more conservative stance, which sets its target significantly lower at 1.04. The desk's perspective sits slightly above the mid-point of this spread, reflecting a more optimistic view on the impact of ownership structures on financial outcomes.
How other firms see it
Several firms, including jpmorgan, are aligned with the desk's view on the beneficial impact of strategic ownership on corporate performance, while bofa holds a contrary stance, expecting weaker outcomes from businesses lacking long-term commitment from their owners.
Watch for the EUR/USD pair to potentially reflect these dynamics of corporate performance as ownership structures translate into broader economic sentiments, impacting key euro and dollar-related indicators.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Companies with strategic major owners perform better long-term compared to those without.
- 02State-owned companies face challenges in capital efficiency and long-term performance.
- 03The ownership structure can guide investment strategies in forex trading.
- 04Understanding ownership types can enhance predictions of corporate success.
Market implications
Investors should keenly observe shifts in corporate ownership structures, particularly among firms encompassing strategic owners, as these changes can dynamically influence share prices and overall market sentiment. The EUR/USD movement may offer insights reflecting these performances in the broader economy.
Risks to this view
Should there be a significant policy shift towards public ownership or strong regulatory changes impacting private equity operations, this could undermine the expected benefits derived from strategic ownership, invalidating the bullish outlook.
Nordea On Your Mind The ideal owners for corporate financial performance 01-12-2021 A company's ownership structure can impact its financial performance. So who are the ideal owners? Nordea's Thematics team has crunched the numbers in the latest Nordea On Your Mind report.
Does a company’s ownership structure affect its financial performance and value creation over time? That’s the question Nordea’s Thematics team set out to explore in their Nordea On Your Mind report, “The ideal owners.” In their analysis, authors Johan Trocmé , Viktor Sonebäck and Thea Koren distinguish between companies that have a major owner and those that do not. They divide the owners of listed companies into four categories: Institutional investors The state Private equity Strategic entities The last category includes owners that typically have a long-term strategic agenda, and an involvement or commitment to the businesses that is more than purely financial.
Companies with strategic major owners seem to find the best balance between leverage, investment and being lean, and they have by far the strongest long-term performance in the sample. Ownership in Europe: The continental versus the Anglo-Saxon model The Thematics team reviewed all European listed companies with a market cap above EUR 500m. Private equity ownership is small (1%), and state ownership limited (6%), with the bulk split between financial institutions and strategic entities.
Continental European companies often have a major strategic owner, while UK companies are most often widely held by financial owners with a greater influence on management, and Nordic companies fall somewhere in between. Ownership type plays a role in long-term value creation The analysis of around 2,200 companies shows that companies with institutional major owners are the norm and do not stand out in any major way. State-owned companies invest for the future but demonstrate less capital discipline and underperform over time.
Private equity companies have higher leverage and generate superior returns but tend to under-invest and do not outperform in the long term. Companies with strategic major owners seem to find the best balance between leverage, investment and being lean, and they have by far the strongest long-term performance in the sample. View from the top To obtain board and group management perspectives, including experiences and reflections on different types of owners and businesses, the Thematics team interviewed Caroline Berg , a fifth-generation family owner representative and chair of the board of Axel Johnson AB , Antti Mäkinen , CEO of Finnish state-ownership vehicle Solidium , and Gunnar Axheim , board member of Swedish state-owned mining group LKAB .
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