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>During the period from December 2020 to February 2022, the increase in foreign ownership and the increase in Tobin's q contributed to the increase in market capitalization.</li>
<li>Since it's difficult to expect board practices to directly affect market capitalization over one-year, I maintain the hypothesis that improving board practices raise it by leading to improving key actions.</li>
<li>Regarding key actions, rather than implementation of individual shareholder return policies alone, systematic implementation of such policies in the context of growth and capital allocation management policies is more effective.</li>
</ul>


During the period from December 2020 to February 2022, the increase in foreign ownership and the increase in Tobin's q contributed to the increase in market capitalization.
Since it's difficult to expect board practices to directly affect market capitalization over one-year, I maintain the hypothesis that improving board practices raise it by leading to improving key actions.
Regarding key actions, rather than implementation of individual shareholder return policies alone, systematic implementation of such policies in the context of growth and capital allocation management policies is more effective.


Japan's Governance: What Are the Effective Factors for Stock Returns?

<ul>
<li>TSE will begin market reclassification on April 4. Nikkei introduced some of the issues and problems related to this, and I would like to share my thoughts on these issues.</li>
<li>This market reorganization is far from what investors desired. TSE, which charges listing fees from the listed companies, is more likely to bend to the wishes of the listed companies.</li>
<li>I believe that what should have been reformed was not the reorganization of market segments but the revision of TOPIX, and TSE market reorganization missed the point from the beginning.</li>
</ul>


TSE will begin market reclassification on April 4. Nikkei introduced some of the issues and problems related to this, and I would like to share my thoughts on these issues.
This market reorganization is far from what investors desired. TSE, which charges listing fees from the listed companies, is more likely to bend to the wishes of the listed companies.
I believe that what should have been reformed was not the reorganization of market segments but the revision of TOPIX, and TSE market reorganization missed the point from the beginning.


Japan's Governance: About Articles on TSE Market Reorganization

<ul>
<li>This article more directly examines whether the momentum of improvement in corporate governance practices is related to stock returns.</li>
<li>Significant positive correlations are shown between changes in Metrical score and changes in market capitalization, changes in foreign ownership, changes in ROA (past 3-years average) and changes in Tobin's q.</li>
<li>Not every year sees the same degrees of improvement in corporate governance as the current year. In 2021, CG Code was revised and the prime-market-listing-standards adopted some items from it.</li>
</ul>


This article more directly examines whether the momentum of improvement in corporate governance practices is related to stock returns.
Significant positive correlations are shown between changes in Metrical score and changes in market capitalization, changes in foreign ownership, changes in ROA (past 3-years average) and changes in Tobin's q.
Not every year sees the same degrees of improvement in corporate governance as the current year. In 2021, CG Code was revised and the prime-market-listing-standards adopted some items from it.


Japan's Governance: Do Companies that Changed Corporate Governance Rating Have Higher Stock Returns?

<ul>
<li>This article asks the question, "Do companies with high corporate governance ratings have high stock returns?" I would like to discuss by using the Metrical Score to evaluate corporate governance.</li>
<li>Companies with higher Metrical Scores tend to have increased market capitalization from December 2020 to February 2022, showing significant positive correlation between Metrical Scores and change in equity market capitalizations.</li>
<li>Metrical has been monitoring the stock returns of top 20 Metrical Score companies since 2015. The top 20 composites have outperformed both TOPIX and JPX400 indexes on a cumulative basis.</li>
</ul>


This article asks the question, "Do companies with high corporate governance ratings have high stock returns?" I would like to discuss by using the Metrical Score to evaluate corporate governance.
Companies with higher Metrical Scores tend to have increased market capitalization from December 2020 to February 2022, showing significant positive correlation between Metrical Scores and change in equity market capitalizations.
Metrical has been monitoring the stock returns of top 20 Metrical Score companies since 2015. The top 20 composites have outperformed both TOPIX and JPX400 indexes on a cumulative basis.


Japan's Governance: Do Companies with High Corporate Governance Ratings Have High Stock Returns?

<ul>
<li>Regarding "ESG Funds Performance" featured in Rapid Response, I would like to consider it in conjunction with an article on ESG funds that was published in Nikkei on February 6.</li>
<li>In fact, ESG funds are already underperforming when it comes to active funds. It is believed that there have been issues with stock picks.</li>
<li>As far environment, Metrical doesn’t believe in excluding it because it is in energy/commodities sector. We look at how the company is thinking and acting and moving forward on ESG.</li>
</ul>


Regarding "ESG Funds Performance" featured in Rapid Response, I would like to consider it in conjunction with an article on ESG funds that was published in Nikkei on February 6.
In fact, ESG funds are already underperforming when it comes to active funds. It is believed that there have been issues with stock picks.
As far environment, Metrical doesn’t believe in excluding it because it is in energy/commodities sector. We look at how the company is thinking and acting and moving forward on ESG.


Japan's Governance: ESG Fund Considerations

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)

Japan's Governance: What Are the Effective Factors for Stock Returns?

This article will try to explore what factors were effective in terms of stock returns by analyzing Metrical universe of 1,487 companies, which are...

Metrical Inc

Japan's Governance: About Articles on TSE Market Reorganization

The reorganization will finally begin on April 4, 2022 with the new market segmentation. This article would like to discuss the Nikkei's recent...

Metrical Inc

Japan's Governance: Do Companies that Changed Corporate Governance Rating Have Higher Stock Returns?

This article will discuss more directly whether the momentum of improvements in corporate governance practices positively influence stock returns.

Metrical Inc

Japan's Governance: Do Companies with High Corporate Governance Ratings Have High Stock Returns?

This article will ask, "Do companies with high corporate governance ratings have high stock returns?" and examine the stock performance by using...

Metrical Inc

Japan's Governance: ESG Fund Considerations

Regarding "ESG Funds Performance" featured in Rapid Response, I would like to share my thoughts on it in conjunction with an article on ESG funds...

Metrical Inc