”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 […]
Tag: Outside Directors
Paula Loop & Paul Denicola: ”Investors and Board Composition”
”In today’s business environment, companies face numerous challenges that can impact success—from emerging technologies to changing regulatory requirements and cybersecurity concerns. As a result, the expertise, experience, and diversity of perspective in the boardroom play a more critical role than ever in ensuring effective oversight. At the same time, many investors and other stakeholders are seeking influence on board composition. They want more information about a company’s director nominees. They also want to know that boards and their nominating and governance committees are appropriately considering director tenure, board diversity and the results of board self-evaluations when making director nominations. All of this is occurring within an environment of aggressive shareholder activism, in which board composition often becomes a central focus………”
Ernst and Young: ”Navigating disruption without gender diversity? Think again.”
”Summary: What is the link between disruption and gender diversity? Innovation. In our experience, the way to spark innovation is to harness the power of different ideas from diverse groups of people who are supported by an inclusive culture. Part of this equation is gender diversity.
Companies that want to survive these challenging times will need to tap into a range of opinions, ideas and experiences. Successful leaders must anticipate and address the sweeping changes in global demographics and advances in technology to create an environment where people and ideas flourish. And improving gender diversity, not only in senior leadership but also across the talent pipeline, can help…. ”
Bloomberg Video – ”Abenomics Assessment: A Good Time to Invest in Japan?”
Seth Fischer, chief investment officer and portfolio manager at Oasis Management, discusses Japan’s corporate governance, the effectiveness of Abenomics and where he sees opportunities. He speaks to Bloomberg’s Rishaad Salamat on “Trending Business.” (Source: Bloomberg)
The Washington Post: ”A Maverick Founder Wins Enemies in Japan With Move to Dump Board”
An excerpt from an article on the somewhat unique situation at Cookpad. We don’t think we have seen a story like this before, at least not recently.
”(Bloomberg) — A spat is rocking one of Japan’s most popular Internet companies after the founder moved to kick out the board, enraging staff and sending shares tumbling.
Akimitsu Sano, who owns 44 percent of Cookpad Inc., shocked investors in January by calling on them to dump all other directors of the recipe-sharing site, saying the company was neglecting its main business. The stock fell 23 percent in one day and has whipsawed with each new skirmish in a battle to control a firm with more than 85 million monthly website users.
Facing exile, as Sano’s stake in effect meant he could unilaterally replace them, the then board sought to negotiate a compromise, and by February reached an agreement for some members to retain roles. Nine directors — Sano, five of his picks and three others from the previous board — were anointed by shareholders at the annual meeting in March.
Study by Prof. Hiroshi Uemura: ”The Attributes of Japanese Corporate Governance Influencing the Quality of Internal Controls”
”Abstract: This study examines the corporate governance characteristics that influence the improvement in the quality of internal controls. Previous studies suggest that corporate governance independence and expertise affect the quality of internal controls (Krishnan et al. 2005; Hoitash et al. 2009). In Japan, however, any company that discloses significant deficiencies (SD) in internal controls has the motive to increase the independence of corporate governance to mitigate any subsequent negative consequences. As a result, independent directors are made the scapegoats, rather than allowing them to fulfill the expectation of improvement in the quality of internal controls. On the other hand, directors with financial expertise that have a high status in a company do influence the improvement in SD in internal controls. This suggests that in Japan it is important to provide financial experts with the power and authority to improve the quality of internal controls in the short term, due to the difference in the provisions between the Financial Instruments and Exchange Act (J-SOX) and the Sarbanes–Oxley Act (SOX). The requirements in Japanese Corporate Law (JCL) for independent directors are not as strict as those within SOX. Therefore, companies in which the boards are able to promote expert directors to important positions improve the quality of internal controls more often than those that are not. It is thus revealed that auditors should be able to discuss with the financial experts as to what is required to improve any significant deficiencies that are detected in the process of internal control audits……..”
Corporate Governance Articles in the Newsletter of the Institute of Social Research, University of Tokyo, March 2016
Corporate Governance
”Social Science Japan newsletter 54 takes up where it left off last issue and continues to explore the theme of governance. This time, the focus is on corporate governance. Six ISS scholars discuss the topic from various angles.
Tanaka Wataru summarizes the ISS research project and the book that inspired this issue’s featured theme. He explains what corporate governance entails and the history of its transformation in Japan. Cato Susumu analyses the dynamics of the wage structure in firms and shows how firm-specific human capital affects wages under a seniority system. Focusing on middle managers as actors in corporate governance, Owan Hideo looks at how they affect firm productivity and what measure can be used to evaluate their performance. Sasaki Dan highlights the concurrent passage, in 2014, of amendments to corporate and school educational law and argues that the reforms have reduced autonomy and increased externally-imposed or topdown control. He raises concerns about the consequences of mandating the inclusion of “neutral,” external members to the executive boards of large corporations. Nakamura Naofumi and Nakabayashi Masaki explore corporate governance in its historical context.
Video: Khan: ”Assessing Japan’s Corporate Governance”
Bloomberg’s Rishaad Salamat speaks to Mr. Zuhair Khan, Head of Japan Research at Jefferies. He discusses Japan’s corporate governance, shares his thoughts on whether it is improving and the impact of Mitsubishi’s manipulation on fuel economy data.
Brunswick Review Journal: ”The Boardroom Issue”
Brunswick Review is a Journal of Communication and Corporate Relations that features insights from global business leaders, policy makers, political critical and journalists as well as Brunswick consultants.
In this edition, the Journal features diverse topics on Directors and Boardroom issues. Among them is an Interview with Mr. Osamu Nagayama titled ‘The View from Outside’ on page 16. Mr. Nagayama is the Chairman and CEO of Chugai Pharmaceutical. He is also a member of the Enlarged Corporate Executive Committee of Rochel besides being a member of board of directors at Sony.
Sonoko Noda and Nobuhiro Sato: ”Japan’s rate of independent directors is one of world’s lowest”
Background:
Last year, Japan introduced codes designed to work together to increase corporate value and investor return in Japanese companies. The Corporate Governance Code and the Stewardship Code are supposed to work hand-in-hand to promote transparency and sustainable growth. Part of the Corporate Governance Code calls for companies to have at least two independent directors. Having outsiders on board, it was hoped would bring discipline as companies reach for higher profits.