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 key is whether the effectiveness of special committee can fairly guide MBO, but whether the independent outside directors are truly independent, properly informed, and skilled is an important assumption.</li>
<li>Since companies with high foreign shareholdings generally have higher corporate governance practices, there are concerns about practices in MBO cases for many companies that do not have high foreign shareholdings.</li>
<li>When a company whose “goal is IPO” conducts MBO when the stock price is lower than at IPO, there are concerns about whether the special committee will guide MBO fairly.</li>
</ul>


The key is whether the effectiveness of special committee can fairly guide MBO, but whether the independent outside directors are truly independent, properly informed, and skilled is an important assumption.
Since companies with high foreign shareholdings generally have higher corporate governance practices, there are concerns about practices in MBO cases for many companies that do not have high foreign shareholdings.
When a company whose “goal is IPO” conducts MBO when the stock price is lower than at IPO, there are concerns about whether the special committee will guide MBO fairly.


Effectiveness of MBO Special Committee Is Linked to Effectiveness of Independent Directors

<ul>
<li>TSE seems reluctant to raise the market capitalization criteria for listing on Growth Market, but wants to encourage management to grow after IPO by raising the criteria for maintaining listing.</li>
<li>The reason why companies don't grow after IPO is that IPOs are often conducted for tax savings for founders and for other reasons without any intention to grow.</li>
<li>It is questionable whether the new listing maintenance criteria will help these companies grow and whether the verbal intervention in the listing review process will be successful.</li>
</ul>


TSE seems reluctant to raise the market capitalization criteria for listing on Growth Market, but wants to encourage management to grow after IPO by raising the criteria for maintaining listing.
The reason why companies don't grow after IPO is that IPOs are often conducted for tax savings for founders and for other reasons without any intention to grow.
It is questionable whether the new listing maintenance criteria will help these companies grow and whether the verbal intervention in the listing review process will be successful.


Can Growth Market Reform Succeed in a Structure of Interdependence of IPO Ecosystem Stakeholders?

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

Cross Asset Strategy

<ul>
<li>A review of recent events and data impacting our investment themes and outlook</li>
<li>US interest rate expectations continue to whip markets around, even as more cracks emerge in the AI trade.</li>
<li>Japan goes for broke with its latest budget and debt issuance.</li>
</ul>


A review of recent events and data impacting our investment themes and outlook
US interest rate expectations continue to whip markets around, even as more cracks emerge in the AI trade.
Japan goes for broke with its latest budget and debt issuance.


Overview #42 – What a Difference a Day Makes!

<ul>
<li>Japan's declining % global GDP and the number of top companies in market capitalization shows that simply boosting profits through yen depreciation left behind the growth speed of global competitors.</li>
<li>While many Japanese companies tried to improve profit margins by reducing labor costs and other expenses, few have managed to improve gross profit margins, which relate to their business models.</li>
<li>The fact that few companies have taken steps to shift to higher value-added products and services is why the yen rate remains a key factor in stock valuations.</li>
</ul>


Japan's declining % global GDP and the number of top companies in market capitalization shows that simply boosting profits through yen depreciation left behind the growth speed of global competitors.
While many Japanese companies tried to improve profit margins by reducing labor costs and other expenses, few have managed to improve gross profit margins, which relate to their business models.
The fact that few companies have taken steps to shift to higher value-added products and services is why the yen rate remains a key factor in stock valuations.


Companies May Worked on Raising OP Margin in Minor Ways Without Working on Raising Gross Margins

<ul>
<li>Eliminating income limits on child allowances seems to be the right policy because the wealthier families have more children. However, it lacks viewpoints toward the growing number of unmarried people.</li>
<li>It seems effective to solve the problem of the growing income disparity and the child-rearing/housework being disproportionately placed on women, and taking appropriate measures for those who desire diverse lifestyles.</li>
<li>Policies don't reach the ever-increasing number of singles. Rather than solutions to declining birthrate, priority is given to policies that distribute money to those who are more certain to vote.</li>
</ul>


Eliminating income limits on child allowances seems to be the right policy because the wealthier families have more children. However, it lacks viewpoints toward the growing number of unmarried people.
It seems effective to solve the problem of the growing income disparity and the child-rearing/housework being disproportionately placed on women, and taking appropriate measures for those who desire diverse lifestyles.
Policies don't reach the ever-increasing number of singles. Rather than solutions to declining birthrate, priority is given to policies that distribute money to those who are more certain to vote.


Political Problems Are Preventing a Solution to the Problem of Declining Birthrates

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)

Effectiveness of MBO Special Committee Is Linked to Effectiveness of Independent Directors

I would like to discuss the issues in the document ““TSE to Introduce New Rules for MBOs to Curb Management-Backed Takeovers,” which was released...

Metrical Inc

Can Growth Market Reform Succeed in a Structure of Interdependence of IPO Ecosystem Stakeholders?

I would like to discuss the issues in the document “Sinking TSE Growth Market: Listing Goal Vices, Investor Detachment” released by the TSE on...

Metrical Inc

Overview #42 – What a Difference a Day Makes!

A review of recent events/data impacting our investment themes and outlook. Fed rate cuts, Japan spending and Lithium upgrades

Rikki Malik

Companies May Worked on Raising OP Margin in Minor Ways Without Working on Raising Gross Margins

I would like to discuss the February 25 Nikkei article, “Corporate earnings, shrinking effect of yen's depreciation: 50% of companies whose fiscal...

Metrical Inc

Political Problems Are Preventing a Solution to the Problem of Declining Birthrates

I would like to discuss the Nikkei article of March 3, 2025 “How Effective Are Child Allowances? The “first child barrier” in measures to prevent a...

Metrical Inc