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>The "lead independent outside director" is one of the most overlooked items in the Corporate Governance Code.</li>
<li>While few companies have lead independent outside director, many companies are compliant with the Code because they are able to "establish a system for collaboration" and therefore have no problems.</li>
<li>In the Code, lead independent outside director isn't specifically listed as the person who will be involved in dialogue with shareholders, but auditors are added in addition to outside directors.</li>
</ul>


The "lead independent outside director" is one of the most overlooked items in the Corporate Governance Code.
While few companies have lead independent outside director, many companies are compliant with the Code because they are able to "establish a system for collaboration" and therefore have no problems.
In the Code, lead independent outside director isn't specifically listed as the person who will be involved in dialogue with shareholders, but auditors are added in addition to outside directors.


Japan's Governance: Revised Corporate Governance Code: Overlooked "Lead Independent Director"

<ul>
<li>The revised Corporate Governance Code, which accompanied the TSE's market reclassification, includes changes aimed at further clarifying the role of the Nomination and Compensation Committees.</li>
<li>Throughout the examination here, it appears that, so far, companies that have implemented higher practices in committees have not performed noticeably better than other groups on a relative basis.</li>
<li>The fact that the stock price isn't highly valued compared to other groups may mean that investors don't value the committee factor much or are skeptical it functions effectively enough.</li>
</ul>


The revised Corporate Governance Code, which accompanied the TSE's market reclassification, includes changes aimed at further clarifying the role of the Nomination and Compensation Committees.
Throughout the examination here, it appears that, so far, companies that have implemented higher practices in committees have not performed noticeably better than other groups on a relative basis.
The fact that the stock price isn't highly valued compared to other groups may mean that investors don't value the committee factor much or are skeptical it functions effectively enough.


Japan's Governance: TSE Prime Market Listing Standards and Establishment of Nom. And Comp. Committee

<ul>
<li>Companies are now required to set concept and measurable targets for diversity in management positions (appointment of women, foreigners, and mid-career hires) and disclose them, but they are voluntary targets.</li>
<li>Number of companies in Metrical Universe by number of female directors shows 28.9% companies have no female directors, 42.5% have 1 female director, and only 28.6% have 2 or more.</li>
<li>Problem of delay in appointing women and foreigners to managers lies in the fact that few companies employ diversity management to incorporate benefits of sharing diverse values into the management.</li>
</ul>


Companies are now required to set concept and measurable targets for diversity in management positions (appointment of women, foreigners, and mid-career hires) and disclose them, but they are voluntary targets.
Number of companies in Metrical Universe by number of female directors shows 28.9% companies have no female directors, 42.5% have 1 female director, and only 28.6% have 2 or more.
Problem of delay in appointing women and foreigners to managers lies in the fact that few companies employ diversity management to incorporate benefits of sharing diverse values into the management.


Japan's Governance: Revised Corporate Governance Code: Ensuring Diversity in Core Human Resources

<ul>
<li>The revised Code of Corporate Governance states that companies listed on the prime market are required to use an e-voting platform and disclose information in English.</li>
<li>Many listed companies have already provided e-voting platforms, but lagging behind in providing disclosure of required information in English.</li>
<li>Companies with a high English document disclosure score (i.e., those with a high English document disclosure score) generally perform better.</li>
</ul>


The revised Code of Corporate Governance states that companies listed on the prime market are required to use an e-voting platform and disclose information in English.
Many listed companies have already provided e-voting platforms, but lagging behind in providing disclosure of required information in English.
Companies with a high English document disclosure score (i.e., those with a high English document disclosure score) generally perform better.


Japan's Governance: Prime Market Listing Criteria and Use of E-Voting Platform/Disclosure in English

<ul>
<li>The revised CG Code requires companies in prime market to have at least 1/3 independent directors. 58% of listed companies have at least 1/3 independent directors and 6% have majority.</li>
<li>Companies with % independent directors of over 50% have the best performance and CG practices, while those with % above 33.33% but below 50% have the lowest Tobin's q.</li>
<li>In fact, companies with % independent directors between 33.33% and 50% constitute the majority of the prime market, so the fact that their stock prices are not valued is serious.</li>
</ul>


The revised CG Code requires companies in prime market to have at least 1/3 independent directors. 58% of listed companies have at least 1/3 independent directors and 6% have majority.
Companies with % independent directors of over 50% have the best performance and CG practices, while those with % above 33.33% but below 50% have the lowest Tobin's q.
In fact, companies with % independent directors between 33.33% and 50% constitute the majority of the prime market, so the fact that their stock prices are not valued is serious.


Japan's Governance: TSE Prime Market Listing Standards and % of Independent Directors

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)

Japan's Governance: Revised Corporate Governance Code: Overlooked "Lead Independent Director"

Lead independent outside director is one of the most overlooked items in the Corporate Governance Code. This revision didn't specifically require...

Metrical Inc

Japan's Governance: TSE Prime Market Listing Standards and Establishment of Nom. And Comp. Committee

The revised Corporate Governance Code, which accompanied the TSE's market reclassification, includes changes aimed at further clarifying the role...

Metrical Inc

Japan's Governance: Revised Corporate Governance Code: Ensuring Diversity in Core Human Resources

This article will focus on "Ensuring diversity in the company's core human resources," which was added as supplementary principle 2-4(1) to the...

Metrical Inc

Japan's Governance: Prime Market Listing Criteria and Use of E-Voting Platform/Disclosure in English

The Corporate Governance Code includes to use e-voting platforms and disclose information in English for the Prime Market listing criteria. This...

Metrical Inc

Japan's Governance: TSE Prime Market Listing Standards and % of Independent Directors

The revised CG Code requires companies in prime market to have at least 1/3 independent directors. This article examines them in performance and CG...

Metrical Inc