Sonoko Noda and Nobuhiro Sato: ”Japan’s rate of independent directors is one of world’s lowest”


Last year, Japan introduced codes designed to work together to increase corporate value and investor return in Japanese companies. The Corporate Governance Code and the Stewardship Code are supposed to work hand-in-hand to promote transparency and sustainable growth. Part of the Corporate Governance Code calls for companies to have at least two independent directors. Having outsiders on board, it was hoped would bring discipline as companies reach for higher profits.

The issue: 

Even with the now year-old codes, however, Japanese companies still have one of the lowest rates of independent directors compared with Group of Seven peers. Of more than 2,000 Japanese companies that disclosed environmental, social and governance data in 2015, only 19 percent had independent directors. That’s up from 11 percent in 2014, but pales in comparison with the United States, where 78 percent of 3,400 companies had independent directors.

“Many Japanese companies are not that comfortable finding outsiders — who are truly outsiders — for the board,” said Ben Adams, executive manager at consultancy IR Japan’s New York branch…………..”

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Source: Bloomberg News

About BDTI
BDTI is a “public interest” nonprofit in Japan dedicated to training about directorship and corporate governance. It is certified by the Japanese government to conduct these activities.


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