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>If stock price is high, then a stock split is the way to go, and stockbrokers have provided a mechanism for trading shares in less than single-unit in the past.</li>
<li>The issue isn't "the trading unit should be lowered because people can't buy shares with high stock prices" but "let's improve so that people can become shareholders with one share.</li>
<li>If Japanese companies are reluctant to increase the number of diverse shareholders, this would be in line with their slower progress in solving issues: diversity, human rights, and environment.</li>
</ul>


If stock price is high, then a stock split is the way to go, and stockbrokers have provided a mechanism for trading shares in less than single-unit in the past.
The issue isn't "the trading unit should be lowered because people can't buy shares with high stock prices" but "let's improve so that people can become shareholders with one share.
If Japanese companies are reluctant to increase the number of diverse shareholders, this would be in line with their slower progress in solving issues: diversity, human rights, and environment.


The Crux of the Problem Is the Company's Reluctance to Increase the Number of Diverse Shareholders

<ul>
<li>Not many individual investors understand the value of ESG investing and buy ESG investment trusts, as inflows/outflows from ESG investment trusts have much to do with market volatility.</li>
<li>It's unclear how much ESG investing contributed to the performance, as aspects were saved by the performance of sectors in which they invest and by the benefits of weak yen.</li>
<li>Efforts must be made to help individual investors understand the value of ESG investing and encourage long-term investment. To this end, investment managers should establish investment approach to ESG investing.</li>
</ul>


Not many individual investors understand the value of ESG investing and buy ESG investment trusts, as inflows/outflows from ESG investment trusts have much to do with market volatility.
It's unclear how much ESG investing contributed to the performance, as aspects were saved by the performance of sectors in which they invest and by the benefits of weak yen.
Efforts must be made to help individual investors understand the value of ESG investing and encourage long-term investment. To this end, investment managers should establish investment approach to ESG investing.


ESG Mutual Funds Are Not to Be ESG Investing for Show

<ul>
<li>Support through reform of social systems needs to develop environment conducive to childrearing, not to mention Scandinavian case. The generation with old view of family is obstacle to these reforms.</li>
<li>As real incomes declined, the number of dual-earner families increased and the fertility rate declined. The decline in the fertility rate is related to the decline in income per worker.</li>
<li>Meanwhile, companies managed to maintain profit margins by holding down labor costs. Declining real incomes, declining birth rates, management distancing itself from diverse values, and stagnant profit margins are interrelated.</li>
</ul>


Support through reform of social systems needs to develop environment conducive to childrearing, not to mention Scandinavian case. The generation with old view of family is obstacle to these reforms.
As real incomes declined, the number of dual-earner families increased and the fertility rate declined. The decline in the fertility rate is related to the decline in income per worker.
Meanwhile, companies managed to maintain profit margins by holding down labor costs. Declining real incomes, declining birth rates, management distancing itself from diverse values, and stagnant profit margins are interrelated.


Is the Stagnant Birth Rate Caused by Gender Disparity or Stagnant Income?

<ul>
<li>Even though shareholder proposals have increased, only 77 of the more than 2,000 companies with a fiscal year ending in March have submitted shareholder proposals, or only a few percent.</li>
<li>Japanese institutional investors begins to examine the content of proposals and exercise their voting rights. It's serious matter that until now they haven't exercised them in accordance with Stewardship Code.</li>
<li>It will still take substantial amount of time to move away from a shareholder meeting protected by a cross-shareholding structure and toward a shareholder meeting that promotes dialogue with shareholders.</li>
</ul>


Even though shareholder proposals have increased, only 77 of the more than 2,000 companies with a fiscal year ending in March have submitted shareholder proposals, or only a few percent.
Japanese institutional investors begins to examine the content of proposals and exercise their voting rights. It's serious matter that until now they haven't exercised them in accordance with Stewardship Code.
It will still take substantial amount of time to move away from a shareholder meeting protected by a cross-shareholding structure and toward a shareholder meeting that promotes dialogue with shareholders.


More Companies Submitted Shareholder Proposals, but All Were Rejected. Where Is the Problem?

<ul>
<li>The number of companies that meet the requirement has increased since the listing criteria for prime market specified specific numbers. However, the majority of companies have managed to meet 30%.</li>
<li>It's clear that once the numerical criteria for board diversity as well as ％ independent directors were specified, it would have gone all the way. But this couldn't be done.</li>
<li>It is concerned that Japanese companies may be distancing themselves from the need to listen to a wide range of opinions and create new value.</li>
</ul>


The number of companies that meet the requirement has increased since the listing criteria for prime market specified specific numbers. However, the majority of companies have managed to meet 30%.
It's clear that once the numerical criteria for board diversity as well as ％ independent directors were specified, it would have gone all the way. But this couldn't be done.
It is concerned that Japanese companies may be distancing themselves from the need to listen to a wide range of opinions and create new value.


Can Companies Barely Meet Independent Director Requirement and Shy Away from Diversity Create Value?

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 Crux of the Problem Is the Company's Reluctance to Increase the Number of Diverse Shareholders

I would like to discuss the points raised the Nikkei article, "Change the system to buy Japanese stocks from one share."

Metrical Inc

ESG Mutual Funds Are Not to Be ESG Investing for Show

I would like to discuss the issues regarding the updated Nikkei article on the "Status of Major Publicly Offered ESG Investment Trusts in Japan."

Metrical Inc

Is the Stagnant Birth Rate Caused by Gender Disparity or Stagnant Income?

I would like to discuss the issues regarding the Nikkei article, "Fertility rates in 2021 during the COVID-19 pandemic rose in many OECD countries,...

Metrical Inc

More Companies Submitted Shareholder Proposals, but All Were Rejected. Where Is the Problem?

I would like to discuss about the issues on the Nikkei article that said, "The number of companies to which shareholder proposals were submitted...

Metrical Inc

Can Companies Barely Meet Independent Director Requirement and Shy Away from Diversity Create Value?

I will discuss about the issues like % independent directors and board diversity raised in Nikkei article, "70% of companies meet the requirement...

Metrical Inc