UK – The UK government has backed a report calling for an end to short-termism in equity markets and said it will work towards ending mandatory quarterly reporting in the European Union (EU).

Business secretary Vince Cable set out his support for the report by Professor John Kay on UK equity markets and long-term decision-making.

Cable said: "Many of us feel that in the past, our public companies and investors have focused on short-term profit at the expense of long-term value."

The behaviour of many banks in the run up to the financial crisis was an extreme example of this "quick buck" mentality, he said, but added that there was clearly a wider problem.

Kay's review called for a shift in the culture of investment and set a clear challenge to companies and those who invested in them, he said.

The report -– 10 Principles for Equity Markets – focuses on reversing the culture of short-termism and restoring relationships of trust and confidence in the investment chain, the Department for Business Innovation and Skills said.

The government will also explore whether it needs to change the law or regulation in order to deliver the principles in practice, the department added.

Cable said further of Kay's report: "His agenda is an ambitious one but I am very encouraged by the level of engagement we have seen already from investors."

This had happened, he said, not only on Kay's ideas, but also through the directors' pay and shareholder voting reforms and moves to address diversity on corporate boards, as well as changes to the way companies report their business strategy and results.

"These actions will help restore trust in markets and in the system of capitalism on which our future prosperity depends," he said.

Specifically, the department said it would work with EU counterparts to put an end to mandatory quarterly reporting and help reduce the excessive focus on short-term earnings.

It would also endorse clear minimum standards of behaviour for investment intermediaries to make sure they act in the long-term best interests of their clients.

As well as this, it will encourage industry to establish an investors' forum to promote constructive engagement with companies, it said.

Good practice statements for company directors, asset managers and asset holders would also be backed by the government, it said.

Among other things, these statements would stress the need for trust-based relationships and advocate more collective action by institutional shareholders.

The National Association of Pension Funds (NAPF) welcomed the government response to the Kay Report.

David Paterson, head of corporate governance at the association, said: "By endorsing Professor Kay's recommendations, the government is giving a clear direction of travel, which will help pension funds play their part more effectively in reducing a short-termist culture in UK companies and markets."

He agreed that equity markets had to work more effectively in the long-term interests of investors and savers.

The NAPF also supported the good practice statements for asset owners proposed in the review.

"We have already taken some of the principles forward by publishing our stewardship policy today," said Paterson.