Category: Directorship

Why do I think director training is so important to Japan’s future? Because I have seen so much of what goes wrong behind the scenes, and the losses and pain that are caused, when boards do not function well here. I have a lot of “scar tissue”, as we say in English.  What is really interesting, is how many commonalities there are in the causes for inadequate governance.  The size of the company, and its industry, really do not seem to matter. It is the reverse of Tolstoy’s quote, as if “all Japanese boards that succeed do so in a different way, but all boards that fail, do so in the same way”  If so, one would think this should make it easier to avoid governance failures.

My first experience as an outside director in Japan began in the year 2000, when the M&A advisory boutique that I led at that time, JTP Corporation, advised the US firm of MapInfo to conclude a strategic alliance and invest in a 25% capital raise by Alps Mapping in Nagoya.  Alps (as it was known in Japanese) was an unlisted firm that was the third largest map publisher in Japan, and had excellent map data.  The company was planning to go public at some time in the future.  Because MapInfo had no staff in Japan at the time, I was nominated by MapInfo to serve on the board of Alps going forward, to protect not only its interests but also those of  other shareholders, because MapInfo had no staff in Japan at the time.

The solid U.S. stock market, which has settled down from last month’s financial system unrest, led Japanese stocks to move higher toward the end of the month.
The CG Top20 stock price index significantly outperformed both TOPIX and JPX400 for the second consecutive month.

The stock market rallied toward the end of the month on the strength of U.S. stock prices as U.S. stocks gradually calmed down from the financial system unrest triggered by the failure of the Silicon Valley Bank in the U.S. On the last day of the month, the Bank of Japan’s monetary policy meeting maintained monetary easing, and stock prices rose sharply.

As the pandemic wound down through 2022, BDTI returned to in-person training. During FY2023, fully 55% of the participants in our “open enrollment” programs were women, thanks in large part to a generously sponsored program that funded “training scholarships” for women. The year before, the equivalent figure was only 32%. We would like to maintain this level of 50%+ female participation in order to spread knowledge of governance and directorship skills throughout all of Japanese society, which is BDTI’s core mission, and to promote the active inclusion of women in director and executive roles as part of that mission.

According to a METI survey, only 20% of listed companies are “taking action on director training”. In addition, while the CGC and related rules have enhanced disclosure, this new data is significantly underutilized. In FY2023, BDTI plans to intensify its activities to increase the quality and breadth of its programs, and to provide disclosure “big data” which facilitates effective stewardship and thereby improves the economy. To achieve our goals, we need to ask for your kind financial support.

We are pleased to report on our activities through March 2023 and our planned activities for the fiscal year 2023. The same information is also available in PDF format.

Metrical provides monthly corporate governance assessments of approximately 1,700 companies with market capitalization exceeding approximately 10 billion yen, primarily those listed on the TSE 1st Section. This year, continuing on from last year, I would like to see how far listed companies have progressed in their corporate governance efforts over the past year.

The chart below shows the changes in each of the evaluation items for approximately 1,700 companies in the Metrical Universe over the past 3 years (December 2020, December 2021, and December 2022). Metrical divides the evaluation items into Board Practices and Key Actions. This time, I will look at the Board Practices section. Let’s take a look at them in order.

The first chart shows the distribution of Metrical CG scores, which represent the overall corporate governance rating of a listed company across a number of corporate governance measures. The distribution of scores in December 2022 is indicated by purple bars. distribution of the bars shows that the distribution of the bars moves to the right (toward higher scores) with each subsequent year, from December 2020, December 2021, and December 2022. It can be inferred that listed companies have advanced their corporate governance initiatives in response to the revision of the Corporate Governance Code in 2021 and the market reorganization of the TSE in 2022. Let’s take a look at the contents of these efforts by evaluation item below.