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 most common reason companies fail to meet listing maintenance standards is insufficient tradable shares market capitalization for Prime and Standard Markets, and insufficient market capitalization growth for Growth Market.</li>
<li>Many companies failing to meet listing maintenance standards on Prime/Growth Market will transition to Standard Market. Those failing to meet Standard market's criteria will seek to transition to regional exchanges.</li>
<li>Most companies failing to meet the listing maintenance standards on the Standard Market can transfer to regional exchanges, but 14 companies face difficulties even in transferring to regional exchanges.</li>
</ul>


The most common reason companies fail to meet listing maintenance standards is insufficient tradable shares market capitalization for Prime and Standard Markets, and insufficient market capitalization growth for Growth Market.
Many companies failing to meet listing maintenance standards on Prime/Growth Market will transition to Standard Market. Those failing to meet Standard market's criteria will seek to transition to regional exchanges.
Most companies failing to meet the listing maintenance standards on the Standard Market can transfer to regional exchanges, but 14 companies face difficulties even in transferring to regional exchanges.


Markets Serving as a Landing Place for Companies Failing to Meet Listing Criteria Will Lose Quality

<ul>
<li>Many companies failing to meet listing maintenance standards will transition to Standard Market. Given the inherent risk of moral hazard, strengthening the discipline of listed companies is a critical point.</li>
<li>Companies that have migrated to or remained in the Standard Market for various reasons harbor moral hazard stemming not from diversity, but rather from gathering in pursuit of lax standards.</li>
<li>If more companies view TSE's increased disclosure requirements as a cost of listing and consider going private, that's positive development. Hopefully, this will lead to progress in resolving “parent-subsidiary listings.”</li>
</ul>


Many companies failing to meet listing maintenance standards will transition to Standard Market. Given the inherent risk of moral hazard, strengthening the discipline of listed companies is a critical point.
Companies that have migrated to or remained in the Standard Market for various reasons harbor moral hazard stemming not from diversity, but rather from gathering in pursuit of lax standards.
If more companies view TSE's increased disclosure requirements as a cost of listing and consider going private, that's positive development. Hopefully, this will lead to progress in resolving “parent-subsidiary listings.”


Raising the Standard of Discipline Among Companies Listed on the Standard Market Is Crucial

<ul>
<li>TSE plans to revise the listing maintenance criteria for its Growth Market to “market capitalization of over 10 billion yen within 5 years of listing,” with announcement scheduled for December.</li>
<li>The problem lies not with companies listing on the growth market itself, but with the increasing number of non-growing companies listing on the growth market.</li>
<li>Few companies exit the market, not just the growth market, which is why many companies lack growth mindset. Revising listing maintenance standards may slightly increase the number of companies exiting.</li>
</ul>


TSE plans to revise the listing maintenance criteria for its Growth Market to “market capitalization of over 10 billion yen within 5 years of listing,” with announcement scheduled for December.
The problem lies not with companies listing on the growth market itself, but with the increasing number of non-growing companies listing on the growth market.
Few companies exit the market, not just the growth market, which is why many companies lack growth mindset. Revising listing maintenance standards may slightly increase the number of companies exiting.


To Improve the Quality of Listed Companies, Every Effort to Promote Going Private Is Necessary

<ul>
<li>Of foreign shareholding in 30% range, 1% is held by activist funds. Meanwhile, the cross-shareholding is around 10%, and ETFs held by BoJ account for 7% of TSE market capitalization.</li>
<li>Passing shareholder proposals remains difficult, as conditions must align: a company must have fairly high foreign ownership, and its conduct must be bad that domestic institutions can endorse the proposal.</li>
<li>Claiming that “shareholder proposals from activist investors often target short-term profit-seeking initiatives” merely serves as a comforting excuse for executives who are postponing management challenges.</li>
</ul>


Of foreign shareholding in 30% range, 1% is held by activist funds. Meanwhile, the cross-shareholding is around 10%, and ETFs held by BoJ account for 7% of TSE market capitalization.
Passing shareholder proposals remains difficult, as conditions must align: a company must have fairly high foreign ownership, and its conduct must be bad that domestic institutions can endorse the proposal.
Claiming that “shareholder proposals from activist investors often target short-term profit-seeking initiatives” merely serves as a comforting excuse for executives who are postponing management challenges.


Criticism of Shareholder Proposals from Activist Investors Is a Comforting Word for Management

<ul>
<li>The P/B ratio, which rose alongside the stock price increase, climbed to 1.4 in October 2025, but this merely matched the level seen from February 2024 to May 2024.</li>
<li>Despite stagnant actual EPS, BPS and ROE, rising stock prices pull up P/E and P/B. Correlation with P/B suggests that appealing to expectations of stock prices—over actual numbers—is more effective.</li>
<li>Whether current valuations are reasonable or if there is further upside potential depends on changes in future expectations and how these are factored into actual results.</li>
</ul>


The P/B ratio, which rose alongside the stock price increase, climbed to 1.4 in October 2025, but this merely matched the level seen from February 2024 to May 2024.
Despite stagnant actual EPS, BPS and ROE, rising stock prices pull up P/E and P/B. Correlation with P/B suggests that appealing to expectations of stock prices—over actual numbers—is more effective.
Whether current valuations are reasonable or if there is further upside potential depends on changes in future expectations and how these are factored into actual results.


Stock Prices Driven by Expectations Require Support from Actual Corporate Performance

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)

Markets Serving as a Landing Place for Companies Failing to Meet Listing Criteria Will Lose Quality

I would like to discuss the November 13 update to the Tokyo Stock Exchange's disclosure materials titled “Case Studies and Updates Regarding the...

Metrical Inc

Raising the Standard of Discipline Among Companies Listed on the Standard Market Is Crucial

I would like to discuss the issues on the Tokyo Stock Exchange's disclosure document dated November 13, titled “Future Measures for the Standard...

Metrical Inc

To Improve the Quality of Listed Companies, Every Effort to Promote Going Private Is Necessary

I would like to discuss the issues on the TSE's disclosure materials dated November 13 titled “Future Measures for the Growth Market.”

Metrical Inc

Criticism of Shareholder Proposals from Activist Investors Is a Comforting Word for Management

I would like to discuss the issues on the November 13 Nikkei article titled “Japan Is an Activist Heaven: Hedge Fund Returns 1.7 Times the Global...

Metrical Inc

Stock Prices Driven by Expectations Require Support from Actual Corporate Performance

I would like to discuss the issues on the key points of the Nikkei newspaper article dated November 9th, titled “The Full-Scale Arrival of the...

Metrical Inc