PWC researchers said they also learned that executives are uncertain how to improve their standards for disclosure and governance.

Titled "The Trust Challenge: How the Management of Financial Institutions Can Lead the Rebuilding of Public Confidence," the survey involved 43 senior executives--35 percent of them from North America.

Executives in the study worked for a variety of financial sectors--40 percent in banking, 16 percent in investment management, 16 percent in capital markets, 14 percent in insurance, and 14 percent in other financial services.

Besides the survey, PWC said it held over 30 one-to-one interviews with fund managers, investment associations, equity analysts, ratings agencies, international financial institutions, bankers and insurers in the United States, Europe and Asia.

The interviews, PWC said, examined the role that financial institutions play as providers of capital to companies worldwide, and their consequent ability to influence general standards of governance and disclosure.

Respondents were allowed to pick more than one response, or in some cases not answer, leading to percentage figures that could total less or more than 100, a PWC representative said.

Asked what pressure there was for greater transparency in the running and reporting of their firms' business results, 30 percent said the greatest pressure was from regulators, 26 percent from investors, 21 percent from the board or audit committee, 14 percent from the media, 9 percent from auditors, 7 percent from analysts and 7 percent from managers.

While there may be little management impetus to improve transparency, most of the executives questioned felt that companies that fail to improve governance and transparency practices will be penalized.

Forty percent said that lack of improvement would mean a higher cost of capital, 23 percent felt share prices would be more susceptible to volatility, and 19 percent felt investors would not buy the stock. Another 12 percent felt the effect would depend on the institution involved, 5 percent had unspecified other reaction, and 2 percent felt there would be no effect.

Sixty percent of survey respondents said they believed that trust in financial institutions has been eroded, and most believe that it has been eroded to a degree that requires structural change, at the regulatory level and most importantly within the institutions themselves.

PWC said the fact that over half of all respondents said that the most intense pressure for improved governance is coming from investors and regulators, rather than their own management is "an indication that financial institutions may be reacting primarily to regulatory and market pressure, rather than actively looking for ways to improve governance and disclosure."

The survey also revealed that European and Asian respondents were more supportive of global accounting standards.

Almost two thirds of European respondents and over a half of Asian respondents believed the creation and adoption of a global set of generally accepted accounting standards would materially increase public trust in financial institutions. Just 33 percent of U.S. respondents believed such standards would have a significant effect.

Commenting on the study, Ian Dilks, a partner at PricewaterhouseCoopers, said that "financial institutions are in the frontline of the debate on trust and need to respond appropriately if they are to restore investor confidence in themselves, in the capital markets, and in the wider economy."

He said PWC is not suggesting that the financial services industry is responsible for changing general standards of disclosure, "but as reporters of corporate information and as major investors in companies that disclose results, they can certainly be vocal advocates and practitioners of improved transparency."

Mr. Dilks said the research suggests "there is more to be done by the management of financial institutions if they are genuinely to play a leadership role in restoring public trust."

On the basis of the research, PWC said it identified ways to help management of financial institutions play a leadership role in the restoration of public trust:

PWC said he industry should lend its support to moves by regulators to formulate consistent international accounting principles

Financial institutions should use such standards in their own disclosure and demand their use from client and investee companies, PWC said.

The firm said financial institutions must rethink their own standards of disclosure, and especially non-financial disclosure.

The survey, PWC said, showed that companies remain wary of disclosing more than they are required to--most internally available information is not revealed to investors. Within individual institutions, the gap between internal and external reporting practices needs to narrow, it said.

Financial institutions and regulators must work together to develop internet-based reporting standards. Harnessing the internet's capability to improve the timeliness and relevance of reporting, particularly through the use of Extensible Business Reporting Language (XBRL), will make analysis of performance easier for everyone, PWC recommended.

Whenever financial institutions provide capital to companies, PWC said, they should seek to strengthen standards at those companies.

PWC said financial institutions must do more to establish the appropriate checks and balances on their own top managers. If financial institutions are to hold other companies to the highest standards of governance through their capital-allocation activities, their own house must be in order.

"If management of financial institutions can echo the same determination to strengthen governance practices as investee companies with regard to their own standards of disclosure and governance, the industry will be able to legitimately claim the mantle of leadership in the battle to rebuild public trust," said Mr. Dilks.

More details on the report are available at www.pwcglobal.com/financialservices or by telephoning Stephanie Peters 020 7212 6917.