Survey About Attitudes Towards Corporate Governance in Japan

BDTIhas conducted a survey on attitudes towards corporate governance in Japan. A summary of the findings is available at http://bdti.mastertree.jp/f/c1hal6ep

Among the most interesting results were:

Only 11.9% of respondents thought that corporate governance at the majority of listed companies is presently working to prevent scandals. Further, 64.0% of all respondents felt that directors at Japanese companies need to be able to make their own proposals to the board from an independent standpoint.

Consistent with the above responses, large numbers of employees at Japanese companies appear to believe that independent outside directors are needed at their companies.When asked specifically about their own companies, 40.8% of board members and corporate officers, 48.8% of managers and sectionchiefs, and 50% of non-managerial employeesagreed with the statement thatthatevenif directors have good knowledge of the law, corporate governance and financial matters, the quality of corporate governance in my companywill not improve unless there is an increase in the number of outside directors who are truly independent.These were thepercentages for those companies that offered any sort of training for their directors. Even including companies that offerno training for their directors, fully 40.7% of all corporate employeesagreed with the same statement.

The survey also revealed that employees who work at companies that provide their new directors with training about corporate governance tend to: a) feel less anxiety about the future of their job or their company, and b) have more trust and confidence in the board of their own company, than employees who work at companies that do not provide new directors with training about corporate governance.

Consistent with the above results, an impressive 54.7% of all surveyed employees expressed interest in receiving such training themselves.This result confirms the general consensus view of the average Japanese employee as diligent and interested, even hungry, to learn new knowledge that could be useful at work. (As context, Japanese companies on average offer fewer off-the-job training opportunities than companies in many other developed nations.)

In a follow-up survey, 36.4% of1,031 board directors and executive officer respondents who have received some form of training about corporate governance topics said that would consider accepting an appointment as an independent external board director if they were asked. This level was approximately double that of respondents who have not received any form of training, and suggests that claims by industry groups that there are not enough candidates to serve as independent outside directors in Japan are unfounded, especially if companies properly educate their staff with training programs.

These results are particularly relevant at the present time, inasmuch as Japan is currently considering revision of its Company Law in order to improve corporate governance along the lines of a plank in the “Manifesto” that brought the Democratic Party of Japan (DPJ) to power in 2009.This plank suggested that public companies should be required to appoint independent outside directors.

The total respondent group of the first survey consisted of 4,119 members, including 3,090 company employees and 1,029 non-company employees.

A more detailed explanation of the results is available at:

http://bdti.mastertree.jp/f/venjo4tr

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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