Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>Clearly, the pace of decline of deemed cross-held shares held in retirement benefit trusts is slower than the pace of decline of ordinary cross-held shares held on the balance sheet.</li>
<li>Companies with deemed shareholdings tend to have larger total assets than companies with general policy shareholdings (policy shareholdings account for 7.3% of total assets).</li>
<li>Although they are less visible, the reduction of deemed shareholdings will come later because shares of important business partners and banks are contributed to retirement benefit trust as deemed shareholdings.</li>
</ul>


Clearly, the pace of decline of deemed cross-held shares held in retirement benefit trusts is slower than the pace of decline of ordinary cross-held shares held on the balance sheet.
Companies with deemed shareholdings tend to have larger total assets than companies with general policy shareholdings (policy shareholdings account for 7.3% of total assets).
Although they are less visible, the reduction of deemed shareholdings will come later because shares of important business partners and banks are contributed to retirement benefit trust as deemed shareholdings.


Do Not Miss the Movement of Deemed Cross-Held Shares, Which Are the Last Resort of Cross-Held Shares

<ul>
<li>Since hostile takeovers are one of the key strategies to quickly gain market share in domestic market with limited growth, more hostile takeovers are expected to occur in the future.</li>
<li>Only 12.1% of prime market companies have majority of independent directors. This raises concerns about whether the opinions of independent directors in minority position will be heard by the boards.</li>
<li>The court's decision to dismiss the claims of companies that proposed hostile takeovers makes us think about whether hostile takeovers are being considered on fair standpoint, even in judicial arena.</li>
</ul>


Since hostile takeovers are one of the key strategies to quickly gain market share in domestic market with limited growth, more hostile takeovers are expected to occur in the future.
Only 12.1% of prime market companies have majority of independent directors. This raises concerns about whether the opinions of independent directors in minority position will be heard by the boards.
The court's decision to dismiss the claims of companies that proposed hostile takeovers makes us think about whether hostile takeovers are being considered on fair standpoint, even in judicial arena.


Hostile Takeovers Should Be Well Thought Out on Fair Basis, Both in Boardroom and in Judicial Arena

<ul>
<li>Human investment, the engine of medium-to-long-term growth, was burden for companies without high profit margins, and it wasn't of much interest to investors seeking stock price returns from short-term perspective.</li>
<li>Today, where people are required to do jobs that machines and robots cannot do and to think about mechanisms for making them work, investing in people is becoming more important.</li>
<li>The fact that investors have focused more on short-term earnings volatility indicates that they have failed to assume growth-based corporate value in valuations. Growth investing is essential to raising valuations.</li>
</ul>


Human investment, the engine of medium-to-long-term growth, was burden for companies without high profit margins, and it wasn't of much interest to investors seeking stock price returns from short-term perspective.
Today, where people are required to do jobs that machines and robots cannot do and to think about mechanisms for making them work, investing in people is becoming more important.
The fact that investors have focused more on short-term earnings volatility indicates that they have failed to assume growth-based corporate value in valuations. Growth investing is essential to raising valuations.


Human Capital Investment Is Also Necessary to Remind Valuations of Growth-Based Corporate Value

<ul>
<li>It is anticipated that the plenary session will now begin the process of determining a deadline for transitional measures based on public comments.</li>
<li>It is likely that a decision will be made on the direction to proceed with English disclosure with respect to the prime market and other market segments.</li>
<li>In the meantime, a full-scale discussion on the listing criteria appropriate for prime market listed companies is awaited.</li>
</ul>


It is anticipated that the plenary session will now begin the process of determining a deadline for transitional measures based on public comments.
It is likely that a decision will be made on the direction to proceed with English disclosure with respect to the prime market and other market segments.
In the meantime, a full-scale discussion on the listing criteria appropriate for prime market listed companies is awaited.


Little Discussion of Listing Criteria Appropriate for Prime Market Listed Companies

<ul>
<li>There is a discrepancy between the prime market concept and the listing criteria of 10 billion yen in tradable market capitalization.</li>
<li>The most significant effect of the market restructuring was the elimination of parent-subsidiary listings, but companies are reluctant to discuss matters not explicitly addressed in the corporate governance code.</li>
<li>Increasing market capitalization is not an overnight solution, but companies should study the initiatives advanced by companies that have increased valuations and implement those initiatives.</li>
</ul>


There is a discrepancy between the prime market concept and the listing criteria of 10 billion yen in tradable market capitalization.
The most significant effect of the market restructuring was the elimination of parent-subsidiary listings, but companies are reluctant to discuss matters not explicitly addressed in the corporate governance code.
Increasing market capitalization is not an overnight solution, but companies should study the initiatives advanced by companies that have increased valuations and implement those initiatives.


Prime Market Should Raise Market Cap Standards. Companies Should Take Measures to Raise Valuations

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

Do Not Miss the Movement of Deemed Cross-Held Shares, Which Are the Last Resort of Cross-Held Shares

I would like to discuss the article of Pension Information, "Deemed Shareholdings Continue to Decline. Decrease of 2.4% in real terms in FY2021...

Metrical Inc

Hostile Takeovers Should Be Well Thought Out on Fair Basis, Both in Boardroom and in Judicial Arena

I would like to discuss the issues on the Nikkei article, "Companies should not run away from hostile takeover bids, but enhance their value."

Metrical Inc

Human Capital Investment Is Also Necessary to Remind Valuations of Growth-Based Corporate Value

I　would like to discuss the issues on the Nikkei article, "Investments based on corporate valuation using human investment as a cue have begun."

Metrical Inc

Little Discussion of Listing Criteria Appropriate for Prime Market Listed Companies

I would like to discuss the issues on the discussions at the 2nd Follow-up Meeting on Revision of Market Classification disclosed by the TSE on...

Metrical Inc

Prime Market Should Raise Market Cap Standards. Companies Should Take Measures to Raise Valuations

This article will discuss the article, "6 months after TSE market reclassification, only about 10% of the companies that have been applied...

Metrical Inc

Do Not Miss the Movement of Deemed Cross-Held Shares, Which Are the Last Resort of Cross-Held Shares

I would like to discuss the article of Pension Information, "Deemed Shareholdings Continue to Decline. Decrease of 2.4% in real terms in FY2021...

Metrical Inc

Hostile Takeovers Should Be Well Thought Out on Fair Basis, Both in Boardroom and in Judicial Arena

I would like to discuss the issues on the Nikkei article, "Companies should not run away from hostile takeover bids, but enhance their value."

Metrical Inc

Human Capital Investment Is Also Necessary to Remind Valuations of Growth-Based Corporate Value

I would like to discuss the issues on the Nikkei article, "Investments based on corporate valuation using human investment as a cue have begun."

Metrical Inc

Little Discussion of Listing Criteria Appropriate for Prime Market Listed Companies

I would like to discuss the issues on the discussions at the 2nd Follow-up Meeting on Revision of Market Classification disclosed by the TSE on...

Metrical Inc

Prime Market Should Raise Market Cap Standards. Companies Should Take Measures to Raise Valuations

This article will discuss the article, "6 months after TSE market reclassification, only about 10% of the companies that have been applied...

Metrical Inc

I　would like to discuss the issues on the Nikkei article, "Investments based on corporate valuation using human investment as a cue have begun."