By Daniel Hunter

The Institute of Directors (IoD) welcomed today’s (Wednesday) interim report of the Kay Review of UK Equity Markets and Long-Term Decision Making.

The report summarises the views of contributors to the Review. However, it does not contain conclusions or recommendations, which will appear in the final report in the summer.

“John Kay is absolutely right to evaluate the efficiency of equity markets in terms of their ability to meet the needs of companies and savers," Simon Walker, Director General of the IoD, said.

"Too often, financial markets are shaped by the interests of financial market participants rather than the customers that they serve.

“This interim report suggests that there is still inadequate engagement between asset managers and public companies. Too many institutional shareholders prefer an arms-length investment policy of “exit” rather than “voice”.

“This is a major problem for UK corporate governance. The UK governance approach is based on shareholders playing an active role in holding companies to account. Institutional investors should urgently consider how they can improve their stewardship of the companies in which they have significant ownership stakes."

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