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>The concern that companies are only striving to develop formal systems and not improving the substance of their corporate governance is shared by the Council of Experts.</li>
<li>A solution to avoid formal system development would be to increase the independence of the board to a level that cannot be cleared by a little matching of numbers.</li>
<li>For effective engagement, management must be aware of the goal of "sustainable growth and expansion of corporate value" in order to communicate in the same language.</li>
</ul>


The concern that companies are only striving to develop formal systems and not improving the substance of their corporate governance is shared by the Council of Experts.
A solution to avoid formal system development would be to increase the independence of the board to a level that cannot be cleared by a little matching of numbers.
For effective engagement, management must be aware of the goal of "sustainable growth and expansion of corporate value" in order to communicate in the same language.


The Starting Point Is to Set "Sustainable Expansion of Corporate Value" As a Management Goal

<ul>
<li>The number of workers expected to be in short supply could further expand if parameters change, such as decrease in working-age population due to further decline in the birth rate.</li>
<li>Even if the current foreign technical internship system relaxes the "no change of employer" restriction somewhat, changing the status of residence to permanent residence has not been points of discussion.</li>
<li>Government has avoided discussions that lead to the acceptance of foreign nationals based on permanent residency and as a result, the problems of population decline and worker shortages have worsened.</li>
</ul>


The number of workers expected to be in short supply could further expand if parameters change, such as decrease in working-age population due to further decline in the birth rate.
Even if the current foreign technical internship system relaxes the "no change of employer" restriction somewhat, changing the status of residence to permanent residence has not been points of discussion.
Government has avoided discussions that lead to the acceptance of foreign nationals based on permanent residency and as a result, the problems of population decline and worker shortages have worsened.


How Long Will Small Modifications Continue, Avoiding Discussion of the Essential Issues?

<ul>
<li>The lack of laws mandating female directors and the absence of specific numerical targets for ％ female directors in Corporate Governance Code have slowed the increase in % female directors.</li>
<li>The lack of understanding of the value of ensuring diversity on the board on companies is serious, as only 9.1% of companies that disclosed skills-matrix adopted "diversity" as a criterion.</li>
<li>It should be a catalyst for companies to understand the value of ensuring diversity on their boards, not merely numbers-crunching that a company only needs to hire one female director.</li>
</ul>


The lack of laws mandating female directors and the absence of specific numerical targets for ％ female directors in Corporate Governance Code have slowed the increase in % female directors.
The lack of understanding of the value of ensuring diversity on the board on companies is serious, as only 9.1% of companies that disclosed skills-matrix adopted "diversity" as a criterion.
It should be a catalyst for companies to understand the value of ensuring diversity on their boards, not merely numbers-crunching that a company only needs to hire one female director.


Legislation to Promote Women Directors Is the Solution, but the Root Cause Is Why It Cannot Be Done

<ul>
<li>The decline in the working-age population is not merely a decrease in the number of workers; it causes a loss of dynamism in society as a whole.</li>
<li>The "5-year rotational use of foreign workers without the assumption of permanent residency," not immigration, is overshadowed by human rights issues.</li>
<li>Besides the high cost of education, an increasing number of people are choosing not to marry, and it is necessary to create a society that respects diverse lifestyles.</li>
</ul>


The decline in the working-age population is not merely a decrease in the number of workers; it causes a loss of dynamism in society as a whole.
The "5-year rotational use of foreign workers without the assumption of permanent residency," not immigration, is overshadowed by human rights issues.
Besides the high cost of education, an increasing number of people are choosing not to marry, and it is necessary to create a society that respects diverse lifestyles.


Behind the Issue of Population Decline Is Also the Issue of Human Rights

<ul>
<li>It's doubtful that if the outcomes of factor analysis of Berkshire Hathaway's portfolio stocks and screened to Japanese stocks would be the stocks that Buffett would want to invest in.</li>
<li>Berkshire Hathaway wouldn't invest in a Japanese company if there were companies in other countries with the same type of business that are more competitive and worthy of investment.</li>
<li>Investors continue to look for companies that few investors are aware of, as stock prices are often high for companies that have competitive advantages and promising future cash flow growth.</li>
</ul>


It's doubtful that if the outcomes of factor analysis of Berkshire Hathaway's portfolio stocks and screened to Japanese stocks would be the stocks that Buffett would want to invest in.
Berkshire Hathaway wouldn't invest in a Japanese company if there were companies in other countries with the same type of business that are more competitive and worthy of investment.
Investors continue to look for companies that few investors are aware of, as stock prices are often high for companies that have competitive advantages and promising future cash flow growth.


Isn't It Too Much to Expect Instantaneous Screening to Yield the Same Shares as Buffett's Approach?

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)

The Starting Point Is to Set "Sustainable Expansion of Corporate Value" As a Management Goal

I would like to discuss the issues on the summary of the "Follow-up Meeting on the Stewardship Code and Corporate Governance Code" disclosed by the...

Metrical Inc

How Long Will Small Modifications Continue, Avoiding Discussion of the Essential Issues?

I would like to discuss the issues on the April 18 Nikkei article, "Foreign Human Resources Re-Expanding in Post-COVID-19 Pandemic, Temporary...

Metrical Inc

Legislation to Promote Women Directors Is the Solution, but the Root Cause Is Why It Cannot Be Done

I have considered the issues on the April 19 Nikkei article, " Norwegian Pension Fund Votes Against Zero Female Directors in Japanese Companies."

Metrical Inc

Behind the Issue of Population Decline Is Also the Issue of Human Rights

I would like to discuss the issues on the April 16 Nikkei article, "Put a Brake" on Population Decline: Foreign Workers, Husband and Wife...

Metrical Inc

Isn't It Too Much to Expect Instantaneous Screening to Yield the Same Shares as Buffett's Approach?

I would like to discuss the issues on the April 14 Nikkei article, "Follow Buffett's Model and Find 'High-Quality, Undervalued' Japanese Stocks.”

Metrical Inc