METI – “Calling for Evidence and Information Concerning …”Competitiveness and Incentives for Sustainable Growth”

See below forMETI's call for evidence and information – With the secretariat operated by the Ministry of Economy, Trade and Industry (METI), the “Competitiveness and Incentives for Sustainable Growth: Building Favorable Relationships between Companies and Investors” project (chaired by Dr. Kunio Ito, professor, Graduate School of Commerce and Management, Hitotsubashi University) compiled main issues to be discussed, aiming to study challenges to be overcome in order to enhance the competitiveness of Japanese companies for their sustainable growth as well as to discuss approaches to the ideal capital market that would support such growth.

METI will convey these main issues to the world, and will also call for a wide range of evidence and information (e.g. data, examples and analysis) on the issues from companies, investors and other people involved in this field not only in Japan but also in other countries.

1. Outline

This project aims to address factors and incentive structures which hinder management and capital markets from enhancing long-term value creation, improving disclosure and engagement practices between companies and investors by gathering key players in and around the investment community, such as board members and senior executives of companies, institutional investors, and sell-side research analysts, etc.

After holding four meetings since its launch in July 2013, the project identified and summarized the main issues as below.

1) Definition of sustainable growth
2) Companies achieving sustainable growth
3) Incentives for boards and executives of companies
4) Capital discipline
5) Alignment of interest, incentives and management policies for corporate value creation between company management and investors
6) Incentives for investors
7) Challenges for analysts
8) Role and organization of institutional asset owners
9) Promoting mid-to-long-term investments
10) Conflicts of interest
11) Short-termism (companies, investors, market players)
12) Challenges concerning corporate disclosure and reporting
13) Disclosure for mid-to-long-term dialogues
14) How dialogue and engagements are conducted

METI will call for a wide range of evidence and information (e.g., data, examples and analysis) that should be referred to concerning the issues from people involved in this field not only in Japan but also in other countries.

While seeking evidence and information from all over the world, the following three working groups will conduct in-depth discussion on each issue and analyze information based on facts:

<Working Group 1>WG on Corporate Value Creation
< Working Group 2> WG on Investment Chain
< Working Group 3> WG on Short-termism and Disclosure

Based on evidence and in-depth discussions, this project plans to publish an interim report early 2014, gather feedback once again, and draw up a final report by the end of March 2014. (cont'd in the links below)

<News Release>

http://www.meti.go.jp/english/press/2013/1016_02.html

<Main Issues and Call for Evidence and Information>

http://www.meti.go.jp/press/2013/10/20131016001/20131016001-3.pdf

<Project Plan>

http://www.meti.go.jp/press/2013/10/20131016001/20131016001-6.pdf

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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