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Category: Uncategorized
Using BDTI’s High-Dimensional CG Big Data to Predict TSR in Japan (working paper)
This is the first draft of a working paper led by two respected Japanese academicians who used governance and firm-specific big data to predict future equity returns in Japan . Conclusion: “we constructed a prediction model of firms’ future TSR and used it to show that the investment strategy based on the model’s predictions could generate non-negligible improvement in returns. These results suggest that high-dimensional corporate governance variables contain informative signals associated with future firm performance over and above reliance on purely financial data.”
The research was conducted using BDTI’s detailed, Japan-specific time-series database for all listed companies in Japan. The results are consistent with the fact that every fund manager that has backtested our data so far has bought a license, and every licensee has renewed so far. It would seem that Japan’s square peg of three different governance structures and peculiar practices does not seem to fit into the standard “global” round hole framework used by other data providers.
Questions to Ask When Engaging with Japanese Firms
The recent focus on ESG has allowed certain firms to de-focus on “G” and appeal to all sorts of “ES” policies and plans in their IR materials. This makes the job of investors harder in the sense that true sustainability and better financial performance are less likely to occur without good G in the first place, so one has to separate out the companies which are truly improving the quality of their governance in terms of its substance rather then just superficially assembling all the right boxes in the chart.
New Donors: A Foreign Institute of Directors, Eight Individuals!
Yesterday I made a request below for donations to BDTI, on the occasion of my birthday. The results were: 1) one significant donation from the Swiss Institute of Directors; 2) one donation from an American in California, and one from a Canadian living in Guam; 3) four promises to donate from foreigners living in Japan; and 4) two donations from a Japanese person. Thank you to the supportive donors! … and thanks for the “likes”!
“On April 16th, 2023 I will be 67 years old. On this “occasion” I would like to ask you to consider donating to The Board Director Training Institute of Japan (BDTI), which I have led in offering director training in Japan for 13 years now, training more than 2,700 persons in programs, and many more via e-Learning. At the same time, going forward, I also will make a series of posts (on this discussion forum) giving a perspective or story related to corporate governance, based on recent events and/or my own 15 years of experience sitting on boards here, that will be light, easy reading but hopefully also be thought-provoking.
BDTI’s work is “missionary work” that requires passion and commitment. Perhaps these stories will be of interest in terms of revealing why I do what I do, the challenges that face Japan and its companies and investors, and how they can be overcome. This will be from the point of view of someone who has sat on boards here for almost 15 years, and has been an active advocate for better corporate governance for more than 20 years.
Swiss Institute of Directors Donates 600,000 Yen to BDTI
Re: Donation of the Swiss Institute of Directors
2023 From: Hilb, Martin
Sent: Saturday, April 15, 2023
Dear Nicholas
Many thanks for your valuable BDTI’s update report for the FY 2022 and for the great summary of your plans for the current year which is very much appreciated. We would like to congratulate you and your team for your great achievements!
d
Per your request please receive a donation from the Swiss Institute of Directors which is also a not for profit organization. Best wishes and kind regards,
d
Martin Hilb
President of the Swiss Institute of Directors
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Public Comment to METI’s Fair Acquisition Study Group
As an individual and not representing any organization, I submitted the public comment attached below to METI’s Fair Acquisition Study Group.
Nicholas Benes – Public Comment to the METI Fair Acquisition Study Group-03.15.2023
My conclusion:
” Instead, I believe that the study group should seriously consider proposing that Japan adopt the UK model for takeovers and similar transfers of control or substantial influence, and the UK’s rules for collective engagement. These rules fit much better with Japan’s systemic and corporate governance realities. Were this to be done, the following policies should be implemented:
How smaller companies can help the world get to net zero faster
By Helle Bank Jorgensen, CEO of Competent Boards
In the business world, the titans grab the headlines and dominate people’s thinking. Walmart, Amazon, Ikea, Unilever, Nike, Microsoft and Samsung are just some of the international giants that bestride the corporate world.
However, like a large iceberg, what goes on beneath the surface could be more important. These large corporations cannot act in isolation: their supply chains are full of and depend on the work of small- or medium-sized enterprises (SMEs). And according to the World Bank’s data, these SMEs more than pull their weight in the global economy, comprising:
● 90% of worldwide businesses
● More than 50% of employment worldwide
● Up to 40% of GDP in emerging economies
● Seven out of every 10 new jobs in emerging economies
In reality, the cogs of business work well by being interconnected and interdependent. As such, SMEs have a huge — but currently understated and undervalued — role to play in the collective corporate effort to address the climate crisis and achieve net zero emissions by 2050 or sooner. It is time to turn the spotlight on the opportunities and
benefits these smaller and medium-sized businesses — and the world at large — would gain from taking meaningful climate action sooner rather than later.
Barriers to change
The links in supply chains are easy to spot. For example, a small company with vehicles for transporting its products will have Scope 1 emissions from those direct operations. However, those same emissions could form part of a much larger company’s Scope 3 emissions from indirect activity. So a simple environmental improvement by a small- or
medium-sized company, such as switching its vehicles to electric power or green hydrogen, could benefit the value chain.
BDTI Year-End Donation Campaign and Update
We would greatly appreciate it if you could possibly donate to BDTI, and even if not, forward this link to any and all. Thank you for your support !
Friends, Supporters, and Compatriots Overseas , — As the end of the year approaches, we at The Board Director Training Institute of Japan want to recognize all of the people who have helped us fulfill our dream of adequately training directors in Japan. Our small organization and its passionate team have endured for 13 years, and have managed to have an outsized impact. For a full list of our recent activities, I hope you’ll read the update below of our recent activities and milestones, to see just how much of an impact your contributions can have, and for many of you, did have.
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Every donation provides much-needed fuel for our many courses, seminars, webinars, and outreach activities in support of better corporate governance in Japan, where the market-clearing price for director training is still very low. As you consider your tax position at the end of 2022, we humbly ask if you would be willing to contribute whatever you can to help us continue this amazing journey and the successes we’ve had.
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Letter to Prime Minister Fumio Kishida from Nicholas Benes on New Capitalism
September 2, 2022
Nicholas Edward Benes
(Writing as an individual. Please see below.)
Setagaya-ku, Tokyo
benesjp22@gmail.com
(Please feel free to email me to receive a PDF copy of this letter.)
Prime Minister Fumio Kishida
Prime Minister’s Residence
2-chōme-3-1 Nagatachō
Chiyoda-ku, Tokyo 100-0014
cc:
Deputy Chief Cabinet Secretary Seiji Kihara
Mr. Masahiko Shibayama, Deputy Chairperson, Election Strategy Committee of the LDP
Hon. Prime Minister,
I am writing this letter with the respect that is due you as the foremost leader of this country, who has set forth a concept for “a new form of capitalism.” If I may, I would like to share my concrete thoughts on how further improving corporate governance in Japan can be a positive game-changer for Japan’s economy, society, and financial markets.
When I saw your moving speech to the NPT Review Conference, I was impressed how fluently you read English. Therefore, I am taking the liberty to write this letter in English, attaching a Japanese translation. As the person who suggested to the US government that President Obama visit Hiroshima, I was pleased with your passionate comments.
BDTI Seeks Dialogue with Large Japanese Institutional Investors
On July 27th, BDTI sent this letter to senior persons at Japan’s largest asset managers, asking for a dialogue and cooperation to improve Japanese boards via training, engagement, and data. Right now, we have fruitful dialogues with the many foreign institutional investors who are the source of 99% of donations to BDTI, or purchase our data, but very few dialogues with Japanese large investors. They could probably benefit from what we have learned providing director training to 2,500 persons over the past 11 years, and from what my colleagues and I have learned serving as independent directors for many years…. given that most fund managers have never sat on a board. We sent out letters like this last year, but received no responses. We will let you know what the result is this year; what kind of firms responded (if any) vs. not. （Note: the letter below is a translation from the original Japanese. )
=================================
Mr. /Ms. XXXX
President/Chairman/CIO
XXX Corporation
Dear ______________,
I am Nicholas Benes, Representative Director of the Board of Directors Training Institute (BDTI).
Since its establishment in 2009, BDTI has provided director and pre-director training, and has analyzed data on the status of corporate governance at listed companies, with the aim of improving governance in Japan.
Today, I would like to ask for your help in improving the quality of boards in Japan. This is something which will lead to the greater attractiveness of the Japanese stock market, which is the source of your firm’s profits. I have contacted you because I believe that we are both striving towards this common goal.