The Department for Business, Innovation and Skills has launched a review of corporate governance in Britain in a bid to tackle short-termism.
Announced by Vince Cable, Secretary of State for Business, the review is titled ‘A Long Term Focus for Corporate Britain’, and will investigate the problems of short-termism in the corporate climate, as well as considering investor engagement, directors’ remuneration, and the communications problems surrounding takeovers.

Company directors, shareholders and other investors have been invited to contribute evidence to the review. In a speech to the House of Commons, Cable said that the review aims to “produce a rounded account of the issues that may be causing a dislocation between what is best for the ultimate owners, the incentives of their agents, and what is best for managers”, making it clear that the focus of the review will be on internal relations, rather than a broader investigation into all corporate stakeholder communications.

While Cable briefly mentioned the effect of improved relationships with shareholders on a company’s wider stakeholder base, the close focus was presented as a necessity on the road to economic recovery for Britain’s businesses.

The consultation will run until 14 January 2011. Contributions can be made at http://www.bis.gov.uk/Consultations.