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.

Shareholder Returns Will Increase over June AGM, but Will Companies Hold up with Sluggish ROE?

Higher Valuations Require Increased Return on Capital to Attract the Attention of Overseas Investors

The Key to Higher ROE Is Higher Profit Margins and Faster Efforts by Smaller Companies

Companies with High Corporate Governance Practices Have High ROE, but Not Vice Versa

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

<ul>
<li>Since non-cash expenses are added to net profit for many manufacturing companies, cash on hand will not decrease at all if the dividend policy is based on net profit.</li>
<li>Using DOE as the basis for dividend policy would help improve ROE because it places certain constraints on the expansion of shareholders' equity.</li>
<li>However, the challenge for raising ROE is the strategic allocation of excess cash on hand and cash flow to shareholder returns and growth investments to improve profitability.</li>
</ul>


Since non-cash expenses are added to net profit for many manufacturing companies, cash on hand will not decrease at all if the dividend policy is based on net profit.
Using DOE as the basis for dividend policy would help improve ROE because it places certain constraints on the expansion of shareholders' equity.
However, the challenge for raising ROE is the strategic allocation of excess cash on hand and cash flow to shareholder returns and growth investments to improve profitability.


Adopting DOE Is Step Forward, but Explanation Needed to Step into Strategic Allocation of Cash Flow

TSE Tokyo Price Index TOPIX

Adopting DOE Is Step Forward, but Explanation Needed to Step into Strategic Allocation of Cash Flow