How the institutional investors assess the health of a company before making the investment decision?

Institutional investors use different tools to assess the health of Company before investing resources in it. Some of the important tools are discussed as under: One-to-one meetings: The meetings between institutional investors and companies are extremely important as a means of communication between the two parties, and a tool to assess the health of companies. Company usually arrange such meeting with its largest institutional investors and not with other investors. Voting: The right to vote can be seen as fundamental tool for some element of control by shareholders. The institutional investors can register their views by postal voting, or, vote electronically where this facility is available. By voting, institutional investors can build pressure on management of the corporation. Most of the large institutional investors now have a policy of trying to vote on all issues which may be raised at their investee company's AGM. Focus lists: A number of institutional investors have established 'focus lists' whereby they target underperforming companies and include them on a list of companies which have underperformed a main index. After being put on the focus list, the companies often receive unwanted, attention of the institutional investors who may seek to change various directors on the board. Corporate governance rating systems: With the increasing emphasis on corporate governance across the globe, it is perhaps not surprising that a number of corporate governance rating systems have been developed. Some institutional investors have developed corporate governance rating systems. A corporate governance rating could be a powerful indicator of the extent to which a company currently is adding, or has the potential to add in the future, shareholders value.