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>TSE's policy this time is to further raise the simultaneous disclosure of Japanese and English, which is less than 50% even for financial statements disclosed in English the most.</li>
<li>The challenges are that high-demand documents aren't disclosed in English, only a part of the original text is translated, and there is time lag until they are disclosed in English.</li>
<li>Differences in English language disclosure efforts are related to the percentage of shares held by overseas investors and are reflected in differences in valuations.</li>
</ul>


TSE's policy this time is to further raise the simultaneous disclosure of Japanese and English, which is less than 50% even for financial statements disclosed in English the most.
The challenges are that high-demand documents aren't disclosed in English, only a part of the original text is translated, and there is time lag until they are disclosed in English.
Differences in English language disclosure efforts are related to the percentage of shares held by overseas investors and are reflected in differences in valuations.


Simultaneous Disclosure in Japanese and English Is the Immediate Goal

<ul>
<li>It is a high hurdle to achieve “30% female board members” in the remaining five years from the current estimated ratio of around 15%.</li>
<li>Increasingly, female managerial positions are being recruited from outside the company to raise the low ratio of female managerial positions (about 10%) and to create female board member candidates.</li>
<li>If companies are busy matching numbers, deviating from the original purpose of ensuring board diversity, no matter how good the goals are, substantial management improvement is not likely to result.</li>
</ul>


It is a high hurdle to achieve “30% female board members” in the remaining five years from the current estimated ratio of around 15%.
Increasingly, female managerial positions are being recruited from outside the company to raise the low ratio of female managerial positions (about 10%) and to create female board member candidates.
If companies are busy matching numbers, deviating from the original purpose of ensuring board diversity, no matter how good the goals are, substantial management improvement is not likely to result.


The Board Diversity Also Reminds Us of the Saying, “It Just Has the Form but Not the Spirit"

<ul>
<li>The revision of disclosure company lists to “TSE's request” seems aimed at helping companies promote their initiatives without losing heart, rather than presenting updates in clearer terms to institutional investors.</li>
<li>For institutional investors seeking to maximize investment performance among a number of investment targets, companies need estimates of the time taken to realize and the magnitude of the expected returns.</li>
<li>For slow-moving Japanese companies, private equity investment managers, who have longer investment horizons and easier access to a variety of exit strategies, would have a better picture of investment returns.</li>
</ul>


The revision of disclosure company lists to “TSE's request” seems aimed at helping companies promote their initiatives without losing heart, rather than presenting updates in clearer terms to institutional investors.
For institutional investors seeking to maximize investment performance among a number of investment targets, companies need estimates of the time taken to realize and the magnitude of the expected returns.
For slow-moving Japanese companies, private equity investment managers, who have longer investment horizons and easier access to a variety of exit strategies, would have a better picture of investment returns.


Private Equity Investment Managers Are Benefiting the Most from “Revised Disclosure Company List”

<ul>
<li>The fact that institutional investors hold large numbers of shares is a key factor in early disclosure of the convocation notice and the dispatch of the convocation notice in English.</li>
<li>There was no notable progress from last year in the early disclosure of convocation notices, the sending of convocation notices in English, and participation in the electronic voting platform.</li>
<li>Early submission of annual securities reports prior to the date of the AGM, which was expected by the FSA and others, increased only slightly.</li>
</ul>


The fact that institutional investors hold large numbers of shares is a key factor in early disclosure of the convocation notice and the dispatch of the convocation notice in English.
There was no notable progress from last year in the early disclosure of convocation notices, the sending of convocation notices in English, and participation in the electronic voting platform.
Early submission of annual securities reports prior to the date of the AGM, which was expected by the FSA and others, increased only slightly.


The Hurdles to Achieving Early Submission of Annual Securities Reports Before AGM Dates Are High

<ul>
<li>In response to TSE's request, more than 80% of the prime market listed companies disclosed their targets, but 3/4 of the companies have yet to disclose specific measures.</li>
<li>While a few companies (with high foreign ownership) have started to create value autonomously, 3/4 of prime market companies do not fit the concept of a prime market listed company.</li>
<li>The fact that managers who cannot think for themselves are gradually beginning to opt for MBOs indicates the potential for investors to be relieved of further patience.</li>
</ul>


In response to TSE's request, more than 80% of the prime market listed companies disclosed their targets, but 3/4 of the companies have yet to disclose specific measures.
While a few companies (with high foreign ownership) have started to create value autonomously, 3/4 of prime market companies do not fit the concept of a prime market listed company.
The fact that managers who cannot think for themselves are gradually beginning to opt for MBOs indicates the potential for investors to be relieved of further patience.


3/4 of Prime Market Companies Have yet to Disclose Specific Measures to Respond to “TSE's Request"

Japan

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TSE Tokyo Price Index TOPIX (TPX INDEX)

Simultaneous Disclosure in Japanese and English Is the Immediate Goal

I would like to discuss the outline of the document “Provision of Contents for Expansion of English Disclosure” disclosed by the TSE on October 7.

Metrical Inc

The Board Diversity Also Reminds Us of the Saying, “It Just Has the Form but Not the Spirit"

I would like to discuss the October 3 Nikkei Newspaper article, “Female Board Directors Halt at 10% of In-House Promotions: Raise Up Talented Women...

Metrical Inc

Private Equity Investment Managers Are Benefiting the Most from “Revised Disclosure Company List”

I would like to discuss the document disclosed by the TSE on September 27, “Measures to Achieve Management Conscious of Cost of Capital and Stock...

Metrical Inc

The Hurdles to Achieving Early Submission of Annual Securities Reports Before AGM Dates Are High

I would like to disclose the material disclosed by the TSE on September 20 regarding “Status of Annual General Meetings of Companies with Fiscal...

Metrical Inc

3/4 of Prime Market Companies Have yet to Disclose Specific Measures to Respond to “TSE's Request"

I have considered the issues on the September 18 Nikkei article, “Companies' P/B Improvement: Less than 30% Disclose Specific Measures, According...

Metrical Inc