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.

There are two companies whose fiscal year ends in March that have completed their shareholders' meetings at the end of May, and the season for annual shareholders' meetings will finally begin in mid-June. At the AGM, after the business report, the financial statement report and the audit results report, the agenda moves on to the resolutions. In most companies, the appropriation of retained earnings is the first item on the agenda for approval (in companies that do not pay dividends or companies that delegate the appropriation of retained earnings to the board of directors by amending the articles of incorporation, this item is not a resolution of the shareholders' meeting). In most cases, the proposed appropriation of retained earnings is usually approved without any difficulty in the resolution. In recent years, many companies announce dividend increases or share buybacks at the time of their 3Q or 4Q financial results announcement in order to avoid wrangling at the voting stage. However, what shareholders are most interested in is how the company uses its profits and cash flow, and this policy is something that institutional investors always ask the company management to confirm in their engagement. I have discussed capital allocation several times in previous articles, but I would like to consider this issue again from the perspective of exercising voting rights.

There are two companies whose fiscal year ends in March that have completed their shareholders' meetings at the end of May, and the season for annual shareholders' meetings will finally begin in mid-June. At the AGM, after the business report, the financial statement report and the audit results report, the agenda moves on to the resolutions. In most companies, the appropriation of retained earnings is the first item on the agenda for approval (in companies that do not pay dividends or companies that delegate the appropriation of retained earnings to the board of directors by amending the articles of incorporation, this item is not a resolution of the shareholders' meeting). In most cases, the proposed appropriation of retained earnings is usually approved without any difficulty in the resolution. In recent years, many companies announce dividend increases or share buybacks at the time of their 3Q or 4Q financial results announcement in order to avoid wrangling at the voting stage. However, what shareholders are most interested in is how the company uses its profits and cash flow, and this policy is something that institutional investors always ask the company management to confirm in their engagement. I have discussed capital allocation several times in previous articles, but I would like to consider this issue again from the perspective of exercising voting rights.

Japan's Governance: Proposed Appropriation of Surplus at the Annual General Meeting of Shareholders

After the financial reporting is over, June is the season for annual shareholders meetings of companies with fiscal year end in March. Since the majority of listed companies ends their fiscal year in March, institutional investors who exercise their voting rights have a lot of work to do during this period of time when the shareholders' meetings are concentrated. In this issue, I would like to discuss information disclosure related to shareholder meetings.

After the financial reporting is over, June is the season for annual shareholders meetings of companies with fiscal year end in March. Since the majority of listed companies ends their fiscal year in March, institutional investors who exercise their voting rights have a lot of work to do during this period of time when the shareholders' meetings are concentrated. In this issue, I would like to discuss information disclosure related to shareholder meetings.

Japan's Governance: Disclosure of Information at General Meetings of Shareholders

In analyzing corporate governance in Japan, it is very important to analyze not only the usual board practices, but also the unique Japanese criteria. Issues unique to Japanese listed companies such as cross-shareholdings, excessive cash on hand due to unclear capital allocation policy, and parent-subsidiary listings etc. have been pointed out in the past. In addition, many companies have been making small improvements to their board practices to make them look better, but the pace of real improvement has been much slower than expected. I believe that it is very important to analyze whether there are any discrepancies with the policies that these companies have stated in their annual reports (yuho) and corporate governance reports, along with the actions that they are actually taking. In this article, I would like to show how the "Actions" they are actually taking are affecting value creation.

In analyzing corporate governance in Japan, it is very important to analyze not only the usual board practices, but also the unique Japanese criteria. Issues unique to Japanese listed companies such as cross-shareholdings, excessive cash on hand due to unclear capital allocation policy, and parent-subsidiary listings etc. have been pointed out in the past. In addition, many companies have been making small improvements to their board practices to make them look better, but the pace of real improvement has been much slower than expected. I believe that it is very important to analyze whether there are any discrepancies with the policies that these companies have stated in their annual reports (yuho) and corporate governance reports, along with the actions that they are actually taking. In this article, I would like to show how the "Actions" they are actually taking are affecting value creation.

Japan's Governance: Correlation Between Actions and Value Creation Indicators

In August last year, Metrical proposed an investment strategy from the perspective of corporate governance. The strategy focused on the parent-subsidiary listing, a practice unique to the Japanese stock market. I would like to examine how the situation was at that time and its performance using the data from the proposal made in August last year.

In August last year, Metrical proposed an investment strategy from the perspective of corporate governance. The strategy focused on the parent-subsidiary listing, a practice unique to the Japanese stock market. I would like to examine how the situation was at that time and its performance using the data from the proposal made in August last year.

Japan's Governance: Parent-Subsidiary Listing and Investment Strategy

Every year, the World Economic Forum (WEF) releases the Gender Gap Index, which quantifies the disparity between men and women in each country. In the "Gender Gap Index 2021" released in March this year, Japan ranked 120th out of 156 countries surveyed (121st in the previous year). In terms of corporate governance, a survey of the universe companies by Metrical, mainly companies listed on the Tokyo Stock Exchange 1st Section, clearly shows how few female directors there are. As of the end of April 2021, of the 1,729 listed companies in the universe, 643 (37.2% of all universe companies) had no female directors, 676 (39.1%) had one female director, and only 410 (23.7%) had two or more female directors.

Every year, the World Economic Forum (WEF) releases the Gender Gap Index, which quantifies the disparity between men and women in each country. In the "Gender Gap Index 2021" released in March this year, Japan ranked 120th out of 156 countries surveyed (121st in the previous year). In terms of corporate governance, a survey of the universe companies by Metrical, mainly companies listed on the Tokyo Stock Exchange 1st Section, clearly shows how few female directors there are. As of the end of April 2021, of the 1,729 listed companies in the universe, 643 (37.2% of all universe companies) had no female directors, 676 (39.1%) had one female director, and only 410 (23.7%) had two or more female directors. 

Japan's Governance: Gender Gap Index and Women 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: Proposed Appropriation of Surplus at the Annual General Meeting of Shareholders

The proposed appropriation of surplus is not simply a matter of considering the dividend payout ratio, but a conclusion that should be reached...

Metrical Inc

Japan's Governance: Disclosure of Information at General Meetings of Shareholders

Information disclosure on AGM has improved year by year. Further disclosure is expected as AGM/IR disclosure shows positive correlation with value...

Metrical Inc

Japan's Governance: Correlation Between Actions and Value Creation Indicators

In analyzing corporate governance in Japan, to analyze not only the usual board practices, but also the unique Japanese criteria is useful. I will...

Metrical Inc

Japan's Governance: Parent-Subsidiary Listing and Investment Strategy

The parent-subsidiary listing has been unique in Japan. This article tries top focus on it as an investment strategy in the perspective of...

Metrical Inc

Japan's Governance: Gender Gap Index and Women Directors

We regard the number of female directors as one of the key factors in board practices in measuring "how the company is willing to change."

Metrical Inc