Kay Review to focus on long-term orientation in investment

The UK government has found a new solution to the problem of short-termism in investment markets: set up a new expert panel. The Department of Business, Innovation and Skills has commissioned John Kay, a prominent and public economics professor, to come up with ideas of how to wean the world of fund management from its fascination with short-term profits of the companies in which they invest. "It is especially urgent that we work out how the equity investment regime can be recalibrated to support the long-term interests of companies as well as underlying beneficiaries, such as pension fund members," Business Secretary Vince Cable said. Kay will examine investment in UK equity markets and its impact on the long-term performance and governance of UK quoted companies. He will look at how the investment chain currently works – from company boards, through pension funds, advisers and fund managers, to ultimate beneficiaries.

Kay is a columnist for the Financial Times and a controversial academic, when he headed up the Said Business School at Oxford in its early years. He is something of a maverick, whose views on reforming banking by breaking retail and commercial activities from investment banking didn't quite make it into the government's recommendation but certainly shaped the debate. Now he gets to recommend law and regulation directly.

Source document: The terms of reference lays out the dimensions of the study in a two-page pdf file.