”Japanese companies appear to be steadily implementing the corporate governance code introduced by the Tokyo Stock Exchange a year ago, at least in form. Of the 2,018 firms listed on the first and second sections of the TSE, 78 percent say they are now in compliance with at least 90 percent of the principles set […]
Author: Admin
GPIF Sues Toshiba: Japan’s Securities Law that Makes it Easy to Sue
The the news of the day is that GPIF is suing Toshiba for ＄１０ million． It is only one asset manager that is suing, almost certainly under Article 21-2 Japan securities law (FIL) which makes it very easy for plaintiffs to sue and claim a “presumed damages amount”, and then shifts the burden of proof to the defendant company (unlike US law) to disprove its negligence. The stock has come down by about 26% or so. (Interestingly, Japanese securities law in this area is much harsher than US law, which never shifts the burden of proof in such cases.)
”Arora’s departure shakes SoftBank’s global strategy”
”Arora also assembled a reliable, well-connected team of assistants and advisers within SoftBank. A weekly conference call connecting members of “Team Nikesh” in Tokyo, London, India and on the U.S. West Coast to their leader to discuss possible investments has become established practice — an arena for information to be brought in from around the world, and the merits of promising ventures debated.
One of SoftBank’s early — and often talked about — investments is Chinese e-commerce giant Alibaba Group Holding. Son funded Alibaba with 2 billion yen ($19 million at current rates) out of a fondness for founder Jack Ma, who was unknown at the time. That stake has yielded some 10 trillion yen in latent gains 14 years later. Though Son is famed for his sharp foresight, what lurks behind his investment decisions is “something akin to a hobby,” he has said. “It’s produced success on occasion, but quite a few failures as well.”
Schroders: ”Investing in the future: Japan’s focus on sustainability”
”Schroders is proud to be one of a very small group of UK companies with a corporate history stretching back more than 200 years. Astonishingly, Japan is home to as many as 3,146 companies which were founded more than 200 years ago; some of which can be traced back more than 1,000 years.
Of course most of these are small, family-run and operate in niche areas, such as hotels and restaurants. Nevertheless, we can consider whether this Japanese aptitude for corporate longevity can tell us anything about the sustainability of Japanese business models in the future, and their ability to reward shareholders over time.
IMF Official in Interview: ”Japan must take Abenomics even further”
”A: The decision makes sense in light of the pace of growth in the country and the pace of growth in the global economy. At the same time, I think it’s important that attention be put on securing sustainable public financing in the long run. I think a postponement makes sense because the economy needs fiscal support rather than fiscal contraction right now. But at the same time, we would like to see a redesign of the consumption tax, where it’s introduced with increases coming in small percentages every year in the regular way, so that the decision is not political. It’s automatic, so that the effects aren’t so big, so that the growth needs of the economy can be taken care of.
But we certainly agree that the amount of public debt will need to be brought down. Getting to a primary balance is an important goal. [Japan needs to] continue to make progress in consolidation and make sure that public financing is made sustainable.
”How are Japanese companies becoming better stewards of capital? Improving corporate governance”
Japanese corporate profits are way up, even if real GDP is not.
”If you were to use just one measure, such as real GDP, to assess how Prime Minister Shinzo Abe was performing, you would conclude his policies are clearly not working: real GDP itself is flat to slightly negative since he took office.
On the other hand, if you look at the aggregate operating profit of Tokyo Stock Exchange Price index constituents as a reflection of corporate profits, it has grown more than 60% since he took office.
Aberdeen’s Insights – “Corporate governance in Japan – a work in progress”
Aberdeen, a consistent supporter of BDTI, has produced this short note (see link below for full memo) succinctly summarizing the recent progress in Japan on corporate governance. ”One year after Japan introduced a voluntary Corporate Governance code, there are signs of progress.
Discussion Paper by Hideaki Miyajima et al : ”Does Ownership Really Matter?: The Role of Foreign Investors in Corporate Governance in Japan”
”Abstract. After the banking crisis of 1997, corporate ownership in Japan shifted from an insider-dominated to an outsider-dominated structure. This paper analyzes the impact of dramatic changes in the ownership structure on corporate governance and firm value, focusing on the role of foreign institutional investors. There are two competing views on the role of increased foreign ownership. The positive view is that foreign investors have had high monitoring capability, and encourage improvements in the governance arrangement of firms, resulting in higher performance.
Another Japanese Long Term CEO Resigns Due to Failed Oversight
The string of resignations by CEOs, who are invariably in Japan the Representative Director as well, continues as a result of weak Boards, weak oversight from the Audit Committees and the absence of truly independent outside directors. http://asia.nikkei.com/Japan-Update/Admitting-oversight-limits-Suzuki-to-step-down-as-CEO
Forbes： U.S. Companies Joining FTSE4Good Index, Banks and Japanese Companies Exiting
“Green” indices are rising in popularity as investors increasingly seek to put business in context of its surroundings, and its wider impact. FTSE4Good, the global index provided by FTSE Russell, measures how a company operates in terms of environmental, social and governance (ESG) factors rather than what it makes — and ESG risk is everywhere, quite apart from “climate risk,” now at the forefront of attention.
Tougher inclusion criteria has just resulted in the removal of 43 companies from the index, with a startling number from Japan, where the picture of the extent of corporate governance reforms remains unclear. Its latest review sees 77 new additions to the FTSE4Good Global Index, of which 26 companies are from the United States, making it the largest contributor………..”