Professor John Kay has formally launched his consultation exercise to examine  UK equity markets and long-term decision making.

In a launch event at the National Association of Pension Funds the review team published a detailed call for evidence paper identifying the key questions the review will explore.  The review will consider growing concerns that short-term incentives and pressures may be having a detrimental effect on the way that companies are owned and managed in the UK.

Professor Kay said:  “We begin this review with one, and only one, preconception: that the purposes of equity markets in this country are to enhance the performance of British business and to provide good returns to savers and pensioners. Equity markets contribute to our prosperity in our multiple roles – as employees of businesses, as consumers of their products, as savers, as prospective pensioners whose standard of living depends on investment returns. Everything we will do in this review follows from the perspective of how these markets contribute to jobs, growth and financial security.”

With UK companies and investors groaning under the weight of UK and EU consultations, Kay made it clear that he is pushing his review in a fresh direction saying: "If a year from now I find myself spending the autumn addressing audiences of company secretaries and compliance officers, describing a new code, illustrating the boxes that they will be required to tick, I and my colleagues will have failed in our job. The subject of this review is corporate decision making and corporate performance, not corporate governance. We will be concerned with actions and effects. Our interest in process arises only to the extent that we can identify direct links between process and performance."

Professor Kay is supported by an Advisory Board comprising Sir John Rose, former CEO of Rolls Royce plc,  James Anderson of Baillie Gifford and Chris Hitchen of RailPen Investments. An interim report is due in spring 2012 which will set out the preliminary findings and explore possible next steps. The initial findings will be open to a second consultation period, after which Kay will make recommendations to Vince Cable in a final report in the summer of 2012. 

Although the focus of the review is UK incorporated and quoted companies operating largely in the UK, speaking to Manifest after the launch, Professor Kay encouraged global investors to get involved and share their views.

Find out more:

Information about the the Kay Review can be found at http://www.bis.gov.uk/policies/business-law/corporate-governance/kay-review for the full background and terms of reference. The last date for evidence is 18th November 2011.