Most of Yahoo Inc's top institutional shareholders may be more interested in making sure Microsoft Corp does not overpay for the Web pioneer, because they have more money invested in the bigger software maker, a research report said on Friday.

Financial risk management analysis company RiskMetrics Group found that close to 90 percent of Yahoo's institutional shareholders have a cross-holding in Microsoft, including most of the top 20 -- and generally have significantly more money invested in Microsoft.

The two companies are at a stand-off in Microsoft's $41.7 billion unsolicited bid to acquire Yahoo. Microsoft has offered to buy Yahoo for $31 a share in cash and stock, a bid which Yahoo's board rejected, saying it undervalued the company.

Microsoft countered by saying that its offer was full and fair, but did not say what it planned to do next. Analysts expect Microsoft to sweeten its bid, possibly to $35 a share, to clinch a deal.

Yahoo shares surged on news of the bid, but Microsoft shares have fallen. Shares of Microsoft were down 11 cents to $28.39 in Friday afternoon trading on Nasdaq, down 13 percent since the offer went public.

Yahoo's stock was down 40 cents to $29.58, representing about a 2 percent premium to Microsoft's half-cash and half-stock offer, which indicates investors are expecting a higher bid.

A shareholder that owns both the target and an acquirer will be more interested in the net benefit of a deal, RiskMetrics said. Shareholders with more money invested in Microsoft than Yahoo will most likely urge Yahoo not to push its case too hard.

They may be more concerned with whether Microsoft will get caught up in a 'deal frenzy' and suffer the 'winner's curse' by overpaying for Yahoo, RiskMetrics analysts wrote in an M&A Edge Note.

We can expect shareholders who own both companies to pressure Yahoo directors to extract a material sweetener from Microsoft (which will help Yahoo directors save face) that isn't seen to destroy the perceived benefits of the merger, prior to ... ultimately succumbing.

Earlier this week, Yahoo's second biggest shareholder, Legg Mason, urged Microsoft to raise its offer. In a letter to investors, Bill Miller, the star stock-picker at the U.S. asset manager, estimated that fair value for Yahoo was around $40 per share.

RiskMetrics said this was not a big surprise since Legg Mason is one of three of Yahoo's top 20 institutional shareholders with significantly more money invested in Yahoo than Microsoft.

Don't expect to see many of the other top Yahoo shareholders following Bill Miller's lead, the report said.

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