Kay Review of Equity Markets publishes interim report

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The Review was announced by the Secretary of State for Business, Vince Cable, in June 2010. It is examining the way investors, shareholders,…

The Review was announced by the Secretary of State for Business, Vince Cable, in June 2010. It is examining the way investors, shareholders, regulators and the boards of UK quoted companies can best serve the long-term interests of British business and the economy.

This followed concerns that short-term incentives and pressures can have a damaging effect on the way companies are owned and managed in the UK.

Today’s Interim Report provides an overview of submissions received in response to last September’s call for evidence, and reflects the many conversations the review team has had with business leaders and other experts over the last few months.

The comments and proposals discussed in the report signal areas of interest for the final report, but do not represent its provisional conclusions, and Professor Kay is not making any recommendations at this stage.

Professor John Kay said:

“I’m very grateful to all those who have submitted evidence to the review and those who have shared their valuable time and expertise. The report outlines a variety of issues which we will be considering further as we develop our recommendations.”

Business Secretary, Vince Cable said:

“One of the big overriding themes in economic policy has to be generating - in both equity markets and corporate Britain generally - a belief in the importance of the long-term perspective.

“I’m very grateful to Professor Kay for the work he has done so far and I look forward to receiving his final recommendations in the summer.”

The interim report is a balanced, open discussion of a wide range of issues affecting equity markets in the UK submitted to the Review, including:

  • The purpose of equity markets, both economically and in facilitating stewardship and corporate governance

  • The company and the board, including Directors’ duties, takeovers, voting rights and executive pay

  • Performance measurement and the effect of financial reporting

  • Market practices and corporate governance standards

  • Asset Management, including the role of regulation in driving investment behaviour and the Stewardship Code

  • Intermediation **in the investment chain**

Professor Kay will present his final report, including recommendations for action, to the Business Secretary in the summer.

Notes to Editors:

  1. The Kay Review follows on from the Department’s call for evidence ‘A Long-Term Focus for Corporate Britain’, launched in October 2010, which explored issues of economic short-termism in the UK. The responses found that there was evidence of short-termism in UK equity markets and of some agency problems in the investment chain. A summary of responses to this call for evidence was published in March 2011

  2. In June 2011, the Business Secretary Vince Cable asked Professor Kay to undertake an independent review, focusing primarily on how well UK equity markets are achieving their core purposes:

  • to enhance the performance of UK companies by facilitating investment and enabling effective governance and decision making in support of long-term profitability and growth;

  • to enable investors to benefit from this corporate activity in the form of returns from equity investment.

  1. Professor Kay’s review is assessing to what extent equity market participants are excessively focused on short-term outcomes to the detriment of these core purposes and what actions might be taken to address this. It is seeking to examine the incentives, motivations and timescales of all participants in the equity markets - from end investors, through pension funds, advisers, fund managers, and the markets, to company boards - and the relationships between them.

  2. Professor Kay is supported by an Advisory Board comprising Sir John Rose, James Anderson and Chris Hitchen.

  3. The interim report is available at:

  4. Interested parties with additional evidence relevant to the Review can make a submission to the secretariat by email to: The deadline for receiving further submissions is Friday 27 April 2012.

  5. BIS’s online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See for more information.

Notes to Editors

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