Murder on the City Express - Who is Killing the London Stock Exchange's Equity Market?

38 Pages Posted: 28 Apr 2023 Last revised: 21 Jun 2023

See all articles by Brian R. Cheffins

Brian R. Cheffins

University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)

Bobby V. Reddy

Faculty of Law, University of Cambridge

Date Written: April 24, 2023

Abstract

In Agatha Christie’s Murder on the Orient Express, Poirot deduced that no single culprit was responsible for a murder on the eponymous train. In this article, which is intended to serve as an aide memoire to assess anticipated reforms, we similarly reason that there is no single suspect responsible for a recent decline in fortunes of the London Stock Exchange’s equity market. We note that globally-relevant factors, such as the rise of private capital, may have impacted the health of the U.K.’s primary stock market. However, sufficiently material differences in various stock market metrics exist between the London Stock Exchange and stock markets elsewhere to suggest that U.K.-specific factors are also significant. We canvass several of those factors: Britain’s listing requirements and corporate governance regime, a paucity of public company investment research, the withdrawal of U.K. pension and insurance firms as public company investors, a U.K. investment culture that prioritises dividends over growth, a lack of world-leading British corporations, and managerial shortcomings. We suggest that all of these factors likely have contributed to the U.K.’s equity market travails, a finding which implies that generating effective reforms will require coherent and expansive policymaking.

Keywords: London Stock Exchange, Corporate Governance, Listing Rules, Private Equity, Pension Funds, Analyst Coverage

JEL Classification: G34, G38, K22, M13, M14, O32

Suggested Citation

Cheffins, Brian R. and Reddy, Bobby, Murder on the City Express - Who is Killing the London Stock Exchange's Equity Market? (April 24, 2023). The Company Lawyer Forthcoming, University of Cambridge Faculty of Law Research Paper No. 16/2023, European Corporate Governance Institute - Law Working Paper No. 714/2023, Available at SSRN: https://ssrn.com/abstract=4428091

Brian R. Cheffins (Contact Author)

University of Cambridge - Faculty of Law ( email )

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European Corporate Governance Institute (ECGI) ( email )

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Belgium

Bobby Reddy

Faculty of Law, University of Cambridge ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

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