Summary of Michael’s Woodford’s Speech to the CII: “If you’re thinking of investing in Japan: Don’t”

The followingentry appeared as part of GovernanceMetrics International’s GMI Blog. GMI is the leading independent provider of global corporate governance and ESG ratings and research. Corporate stakeholders – including leading investors, insurers, auditors, regulators and others – use GovernanceMetrics services to identify and monitor risks related to non-financial measures covering key environmental, social, governance and accounting risk factors.

April 03, 2012

Panel Discussion Event: ” After Olympus….What Do Foreign Investors Want Most From Japanese Companies?”

Event Date : May 28th, at 4:00 – 6:00 pm (Arranged in collaboration with the Canadian Chamber of Commerce in Japan, the ACCJ, and TMI Associates.)

Fiscal year 2011 seems to have been the year of corporate scandals and governance mishaps in Japan. As a result, policymakers have voiced serious concern about the need to improve corporate governance because foreign money is deserting the market.

Is Japan Really a Buy? The Corporate Governance, Cash Holdings, and Economic Performance of Japanese Companies

ABSTRACT: Over the past ten years there has been much discussion about whether corporate governance in Japan has improved and, if so, whether this has translated into improved corporate performance.
We investigate whether observed changes in Japanese firms’ cash holdings and payout policy are consistent with improved governance practices.

To do this, we benchmark Japanese firms against U.S. firms. We find mixed evidence on whether Japanese governance has improved