Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>Companies that have been unable to achieve growth in corporate value and stock price increases need to shift their management thinking toward sustainable growth in corporate value.</li>
<li>When analyzing 1,793 companies in Metrical Universe by independent director ratio group, companies with an independent director ratio of 50% or more show excellent capital profitability and stock price valuation.</li>
<li>One option for implementing serious corporate governance reforms in the next revision of the Corporate Governance Code is to raise the standards to a level that cannot be easily manipulated.</li>
</ul>


Companies that have been unable to achieve growth in corporate value and stock price increases need to shift their management thinking toward sustainable growth in corporate value.
When analyzing 1,793 companies in Metrical Universe by independent director ratio group, companies with an independent director ratio of 50% or more show excellent capital profitability and stock price valuation.
One option for implementing serious corporate governance reforms in the next revision of the Corporate Governance Code is to raise the standards to a level that cannot be easily manipulated.


An Option for Implementing Serious Corporate Governance Reforms to Achieve Results Are...

<ul>
<li>P/B was highly correlated with P/E, so it'll be effective for individual companies to announce/implement measures to increase EPS or profits in order to attract the attention of overseas investors.</li>
<li>From April 2022 to June 2025, overseas investors have been focusing on companies with significant potential for shareholder returns, as the TOPIX has the highest correlation with BPS.</li>
<li>The recent rise in stock prices may be due to expectations for increased shareholder returns rather than growth expectations, as EPS and BPS have risen while P/B and P/E haven't.</li>
</ul>


P/B was highly correlated with P/E, so it'll be effective for individual companies to announce/implement measures to increase EPS or profits in order to attract the attention of overseas investors.
From April 2022 to June 2025, overseas investors have been focusing on companies with significant potential for shareholder returns, as the TOPIX has the highest correlation with BPS.
The recent rise in stock prices may be due to expectations for increased shareholder returns rather than growth expectations, as EPS and BPS have risen while P/B and P/E haven't.


Recent Stock Price Rise May Be Due to Expectation for Greater Shareholder Returns Rather than Growth

<ul>
<li>More companies are mentioning share buybacks, reducing cross-shareholdings, capital allocation policies, and capital costs. However, the ROE of most companies has not improved significantly.</li>
<li>“TSE's request” is at critical juncture addressing whether it'll lead to formal improvements such as the introduction of corporate governance code, or whether it'll enable sustainable growth in corporate value.</li>
<li>Looking at recent market trends, investors are increasingly expecting activist investors to directly demand management reforms from companies, in anticipation that it'll take time to realize results of internal reforms.</li>
</ul>


More companies are mentioning share buybacks, reducing cross-shareholdings, capital allocation policies, and capital costs. However, the ROE of most companies has not improved significantly.
“TSE's request” is at critical juncture addressing whether it'll lead to formal improvements such as the introduction of corporate governance code, or whether it'll enable sustainable growth in corporate value.
Looking at recent market trends, investors are increasingly expecting activist investors to directly demand management reforms from companies, in anticipation that it'll take time to realize results of internal reforms.


Isn't the Market Impatient for the Companies to Implement Management Reforms?

<ul>
<li>Standard Market is home to companies that face challenges that fail to meet tradable shares ratio, can't grow market capitalization, or feel it burdensome to meet governance and disclosure requirements.</li>
<li>TSE is likely to request companies listed on the Standard Market to disclose improvement measures in response to TSE's requests, rather than raising the listing maintenance criteria.</li>
<li>262 Standard Market companies are listed subsidiaries. It's considered that the quickest way to improve the quality of the Standard Market is to delist these companies by eliminating parent-subsidiary listings.</li>
</ul>


Standard Market is home to companies that face challenges that fail to meet tradable shares ratio, can't grow market capitalization, or feel it burdensome to meet governance and disclosure requirements.
TSE is likely to request companies listed on the Standard Market to disclose improvement measures in response to TSE's requests, rather than raising the listing maintenance criteria.
262 Standard Market companies are listed subsidiaries. It's considered that the quickest way to improve the quality of the Standard Market is to delist these companies by eliminating parent-subsidiary listings.


The Main Battlefield for Dissolution of Parent-Subsidiary Listings Will Shift to Standard Market

<ul>
<li>Companies with market capitalization of under 10 billion yen will be given long grace period. Considering inflation and long grace period, this seems not such a difficult hurdle to overcome.</li>
<li>If it becomes easy to meet the new standards, the growth market may not change much from the current situation, where many companies with limited growth potential remain.</li>
<li>Even though there're measures to enable companies to move to standard market if things don't work out, it's questionable how many companies will seriously pursue measures to increase market capitalization.</li>
</ul>


Companies with market capitalization of under 10 billion yen will be given long grace period. Considering inflation and long grace period, this seems not such a difficult hurdle to overcome.
If it becomes easy to meet the new standards, the growth market may not change much from the current situation, where many companies with limited growth potential remain.
Even though there're measures to enable companies to move to standard market if things don't work out, it's questionable how many companies will seriously pursue measures to increase market capitalization.


How Effective Will the Changes in Listing Criteria Be, Amid a Long Grace Period and Secured Listing?

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

An Option for Implementing Serious Corporate Governance Reforms to Achieve Results Are...

I would like to discuss the issues on the Nikkei newspaper article dated July 9, “Enhance the Function of Outside Directors.”

Metrical Inc

Recent Stock Price Rise May Be Due to Expectation for Greater Shareholder Returns Rather than Growth

I would like to discuss the July 12 Nikkei article, “One year since Japanese stocks hit their all-time high, supported by share buybacks; earnings...

Metrical Inc

Isn't the Market Impatient for the Companies to Implement Management Reforms?

I would like to discuss the document “Future Initiatives Regarding Management that Considers Capital Costs and Stock Prices.” published by TSE on...

Metrical Inc

The Main Battlefield for Dissolution of Parent-Subsidiary Listings Will Shift to Standard Market

I would like to discuss the issues raised in the document “Future Direction of the Standard Market” published by TSE on July 9, 2025.

Metrical Inc

How Effective Will the Changes in Listing Criteria Be, Amid a Long Grace Period and Secured Listing?

I would like to discuss the issues on the document “Future Measures for the Growth Market” published by TSE on July 9, 2025.

Metrical Inc