The Purpose of Finance: improving real economy productivity by addressing short-termism

The dinner is the latest in the Purpose of Finance initiative on which we are collaborating with Pension Insurance Corporation, and the discussion will focus on a working draft of an upcoming research paper that explores the concrete impact on the real economy – mainly in the form of reduced productivity growth – of short-termism in capital markets.

The role of capital markets in influencing productivity performance is almost entirely absent in Westminster discussions about how to raise the UK’s economic prospects. Yet addressing short-termism would result in a better allocation of capital, more growth and higher living standards.

The research explores a wide range of policy suggestions that are relevant to addressing short-termism. These policy areas include: corporate governance, remuneration and reporting; changing industry culture via the syllabus for industry qualifications; and, using advances in data analytics to gain better information on investment propositions.