The current paper focuses on the importance of investors in modern firms. emphasis is given on the drive for shareholder value, which is considered as a strategic tool for the stabilization of business performance. It has been proved investors can have a key role in the survival of firms in the current financial crisis. however, it is necessary that specific strategies be used so that the increase in shareholder value is continuous and standardized (or else, stable) in the long term.
The role of investor in modern businesses is likely to be differentiated in accordance with a series of criteria. normally, the business structure indicates the potential role of investors in the development of business activities. however, other criteria, like the position of the firm in the market – is related with the size of the firm – and the leadership style is likely to affect the role of investors within the particular organization. Different views have been developed in the literature regarding the power of the investors to intervene in the activities of modern businesses.
In the study of Mikami et al. (2010) investors in modern firms are related with a specific target: the increase of business efficiency. in the above study a comparison was made between firms owned by investors and firms owned by workers. it has been proved that ‘the firm is efficient when it is owned by the input supplier (the investor or worker) who incurs large sunk costs of capital’ (Mikami et al., 2010, 77). on the other hand, it is assumed that firms that are owned by workers are less efficient – due to the lack of funds required for the cover of risks.
From a similar point of view, it has been proved that ‘ownership concentration has a .negative impact on board independence, but no impact on audit committee independence while board independence enhances firm value’ (Setia, 2009, 694). the above findings can lead to the assumption that the concentration of power in hands of specific investors offer to these investors the chance to have a decisive role in the development of business activities. however, in the above case the effectiveness of auditing in the particular organization is not expected to be decreased. .