Japan’s Corporate Governance Revolution: Halfway Through the Tunnel (Equities First/Nasdaq Report)

”Over the past six years Japan has put in place a long list of corporate governance reforms, amounting to a virtual revolution in thinking at corporations, domestic institutional investment firms, and even society. However, because Japan is still only halfway through the “tunnel” of reform and thinking, much of the resulting value creation for investors and other stakeholders is yet to come. Key takeaways from this whitepaper’s data-driven review of Japan’s governance “revolution” include:

  • Tangible corporate governance reform has come to Japan, in the form of a robust Corporate Governance Code and Stewardship Code.
  • In tandem with government policy, advocacy by investor groups and pro-governance corporate leaders will continue these positive reforms in the years to come.
  • Japanese firms have “got the message” that a sea change has occurred: a majority of firms are hiring outside directors, establishing nominations and compensation committees, and reducing takeover defenses such as poison pills.
  • Japanese boards are starting to embrace global trends for incentive-based compensation, higher levels of diversity, and focus on returns and capital efficiency.
  • Cross-shareholdings and other “allegiant holdings” are being unwound as foreign and domestic institutions alike have become more proactive in their proxy voting strategies, making the market more attractive in general.
  • Merger and Acquisitions (M&As) and activism are on the rise, raising capital efficiency or managerial awareness of the need for it.
  • As a result of many of the above changes, Return on Assets (ROA) values in Japan are trending higher across the board.

While progress has been significant, it is up to shareholders to work closely with management teams and boards to keep up with the ever-increasing global standards of good governance and value enhancement. As this constructive engagement and activism continues, there will be many attractive opportunities for investment and growth at firms that acclimate to new expectations.

Readers of this whitepaper will gain a clear understanding of the breadth of the past decade of transformative reforms in Japanese corporate governance, and the reasons why there is still much untapped value that can be realized in the Japanese market.


“Japan’s Corporate Governance Revolution” was written by Nicholas Benes and co-published by Nasdaq and Equities First. It is the first in the series Corporate Governance: Driving Value Creation in Asia Pacific.

Nicholas is the director and co-founder of The Board Director Training Institute of Japan (BDTI). Nicholas is trained in both law and business (JD-MBA), is bilingual in Japanese and English, and has served on a number of corporate boards in Japan. He gained experience in investment banking over 11 years at JP Morgan, in New York, London and Tokyo, after which he founded a boutique M&A advisory firm in Japan.

For over 10 years, BDTI has provided training for board members and executives on corporate governance and related management topics. BDTI is a special “public interest organization” that is certified and inspected by the Japanese government, and is supported by donations from institutional investors.

In addition to its training activities, BDTI promotes efficient analysis of corporate governance at all listed Japanese companies, by normalizing time-series data (including text) from all key disclosure documents in Japan, and providing this data through its proprietary data access platform “GoToData” and consulting projects. This dataset has been used extensively in the creation of this whitepaper to present a fact-based picture of the Japanese market and its ongoing governance transformation.”

Download “Japan’s Corporate Governance Revolution” here.






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