”Poor Earning Power of Japanese Firms” (picture=1000 words)


Figure 2: Return on Assets Before and After Corporate Leadership Change

Hyeog Ug Kwon, Faculty Fellow, RIETI:   ”Japanese firms invest in research and development (R&D) on a level comparable to that of their U.S. counterparts. They possess a high-quality workforce and receive decent management practice scores for organizational and human resource (HR) management. Yet, they fall significantly behind U.S. firms when it comes to earning power. Figure 1 below, which I calculated along with Senshu University School of Economics Associate Professor Kim Young Gak, plots the average ratio of operating income to sales for Japanese, U.S., and South Korean listed companies from 1955 to 2006. As it shows, the operating income ratio of Japanese firms never surpassed that of U.S. firms over the entire 50-year period, and trended downward until 2003……..”

Figure 1: Average Operating Income to Sales Ratio

Reasons behind the Poor Earning Power of Japanese Firms

Hyeog Ug Kwon, Faculty Fellow, RIETI

Continue reading using link below: http://www.rieti.go.jp/en/columns/a01_0432.html

Source: Research Institute of Economy, Trade & Industry, IAA

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Your email address will not be published.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.