METRICAL: Corporate Governance Report in English

The AGM season for the March fiscal year end companies is approaching as most of Japanese companies hold it in June, while some companies cannot have finalized the financial reporting yet due to the spread of novel coronavirus infectious diseases (COVID-19). In recent years, an increasing number of companies have moved the date of the AGM up from the end of June (historically majority of companies have held it on Thursday of the last week in June), and many companies are providing and disclosing notices of convocation of general meetings of shareholders in English. Also, although the articles of incorporation must be changed, an increasing number of companies are allowing electronic voting. These are very good initiatives for shareholders and investors. Metrical evaluates how the companies enhance the IR information disclosure as well as such above items as the AGM/IR criteria. For reference, the correlation between AGM/IR factor and key performance measures such as ROE (actual), ROA (actual) and Tobin’s Q is shown below. Especially in Tobin’s Q, the significant positive correlation of this factor is remarkable. Obviously, a company with a higher AGM/IR scores, such as higher IR information disclosure and accessibility to annual general meeting of shareholders would be traded at a higher share price in the market. This result could encourage those who are in charge of IR at a public company above all.

On the other hand, only a limited number of companies have filed their corporate governance reports in English to the Tokyo Stock Exchange. As of May 2020, of all listed companies (about 3,800 companies) in Japan, only 265 companies publish the corporate governance report in English. Considering the higher ownership % of overseas investors and the higher share of trading volume, we believe that more companies may disclose their corporate governance reports in English.

Please see detail in the following link.
Please feel free to contact the below email address if any interest or query.

Aki Matsumoto, CFA
Executive Director
Metrical Inc.

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