“Fixing Japan’s Information Leaks”

Article by Gavin Blair in The Trade News – excerptfrom the article –
The Tokyo Stock Exchange (TSE) sent out a letter recently to all listed companies warning that they would be put on a 'watch-list' if information was not released at the proper time and through the appropriate channels.

The foreign media and investors have been complaining about leaks to the Nikkei saying that it's not fair disclosure to everyone on the market because there's no English translation of it, said Benes. That’s a tenuous complaint: do American companies simultaneously release information in Japanese or Hindi?

That said, I think Japan should consider clarifying its own form of “Regulation Fair Disclosure” (the U.S. rules on releasing information simultaneously). The real issue is, if new information is material, it should be disclosed, not 'leaked,'” added Benes.

The TSE has now publicly stated its intention to enforce the rules – which have long been in existence – though it remains to be seen whether it will be particularly strict with constituent companies of its new JPX-Nikkei Index 400, for which good governance is one factor used to determine eligibility for membership.

This year's growth strategy document from the Japanese government placed unprecedented focus on corporate governance, including putting in motion the establishment of a nationally recognised best practice code.

Right now in Japan, there is no document, no book you can buy, that purports to tell you what best practice is for corporate governance, points out Benes, who successfully pushed for the Financial Services Agency to be given authority over the new policy.

Since for the past 10 years it has largely been METI [the all-powerful Ministry of Economy, Trade and Industry] who was in charge of governance policy, this means a 'sacred cow' just got gored, says Benes. The FSA is in fact the most logical group – it is the only agency that has the legal duty to protect investors. And they have the legal duty to regulate the stock exchange – the mechanism through which most corporate governance codes are enforced – and to increase the efficiency of capital markets.

While proper training of directors may not be the answer to every governance issue at Japanese companies, Benes firmly believes it is a good place to start.

Far too many Japanese boards are not real boards: they are formalistic meetings which engage in the minimum necessary corporate formalities, suggests Benes. …

Read the full article:



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.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.