The Kay Review of UK Equity Markets and Long-Term Decision Making
Interim Report:
On 29 February 2012 Professor John Kay published the Interim Report of his independent review to examine investment in UK equity markets and its impact on the long-term performance and governance of UK quoted companies. The Interim Report summarises the responses to the review’s call for evidence and presents a broad discussion of the issues raised. It is available via the following link.
Interim report (PDF, 555 Kb)
The comments and proposals discussed in the report signal areas of interest for the final report but do not represent its provisional conclusions. Professor Kay is not making any recommendations at this stage. He will present his final report, including recommendations for action, to the Secretary of State for Business in the summer.
Copies of the responses to the call for evidence are available via the following link:
Kay Review Responses
Interested parties with additional evidence relevant to the Review can make a submission to the secretariat by email to: kayreview@bis.gsi.gov.uk. The deadline for receiving further submissions is Friday 27 April 2012.
About the Review:
The Secretary of State for Business, Vince Cable, commissioned Professor Kay to undertake the review on 22 June 2011.
In August, Professor Kay appointed three senior city figures to form an Advisory Board for the review:
• Sir John Rose, former Chief Executive of Rolls-Royce plc;
• James Anderson, Partner and Manager at Baillie Gifford; and
• Chris Hitchen, Chief Executive of the Railways Pension Trustee Company, and Chairman of the Pensions Quality Mark.
On 15 September 2011, Professor Kay launched the Kay Review’s call for evidence at the National Association of Pension Funds (NAPF). Professor Kay’s speech, outlining his philosophy and objectives for the review, is available via the following link.
Professor Kay's Speech-call for evidence launch (PDF, 40 Kb)
The call for evidence paper built on the previously published terms of reference, and sets out a range of issues and questions on which we asked for evidence. A copy of the paper is available via the following link. This call for evidence closed on 18 November 2011.
Kay Review call for evidence paper (PDF, 48 Kb)
The review’s principal focus is to ask how well 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; and to enable investors to benefit from this corporate activity in the form of returns from equity investment.
It is considering to what extent equity market participants are excessively focused on short-term outcomes to the detriment of these core purposes, and if so, what actions might be taken to address this. It is examining 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.
Contact details
The review team may be contacted by post or e-mail at the following addresses, or by telephone on +44(0)20 7215 5098
kayreview@bis.gsi.gov.uk
The Kay Review
Department for Business, Innovation and Skills
Spur 1, Floor 3
1 Victoria Street
London SW1H 0ET
Timetable for the review
• September 2011 - Publication of the review’s call for evidence paper.
• 18 November 2011 - Initial consultation period based on call for evidence closes.
• 29 February 2012 - Interim report providing an overview of the submissions received in response to the call for evidence and a discussion of the issues raised.
• 27 April 2012 - Deadline for submission of any additional evidence following the Interim Report.
• Summer 2012 - Final report to the Secretary of State for Business, Innovation and Skills, making recommendations.
Terms of Reference
The original broad terms of reference for the review, published in June 2011, are available via the following link.
Kay Review Terms of Reference (PDF, 28 Kb)
Press releases
Background:
The 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, and a number of broader corporate governance issues surrounding takeovers and executive pay. A summary of responses to this call for evidence was published in March 2011. The responses to the call for evidence found that there was evidence of short-termism in UK equity markets and of some agency problems in the investment chain. It was these findings which prompted the Kay Review. The call for evidence document, the summary of responses and further information can be found at:
A Long-Term Focus for Corporate Britain: A Call for Evidence
