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>With the TSE requiring disclosure of rationale regarding parent-subsidiary listings, etc., it is certain that more companies will move to dissolve parent-subsidiary listings.</li>
<li>The background for the high TOB premium in Japan was that many companies had stock prices considerably lower than their intrinsic value.</li>
<li>There are total of 1,217 companies: 230 listed subsidiaries and 987 equity method affiliates. In addition to this, industry restructuring is also required; there are still numerous opportunities for TOB.</li>
</ul>


With the TSE requiring disclosure of rationale regarding parent-subsidiary listings, etc., it is certain that more companies will move to dissolve parent-subsidiary listings.
The background for the high TOB premium in Japan was that many companies had stock prices considerably lower than their intrinsic value.
There are total of 1,217 companies: 230 listed subsidiaries and 987 equity method affiliates. In addition to this, industry restructuring is also required; there are still numerous opportunities for TOB.


Dissolution of Parent-Subsidiary Listing Is Just Beginning. Included Affiliates, It'll Grow Further

<ul>
<li>In Japan, where there’s strong peer pressure, people are reluctant to do something before someone else does, and tend to follow the trend once the majority of formality is known.</li>
<li>When numbers are specified and rules are established, Japanese companies tend to scramble to match the numbers. Thus, many companies have not voluntarily improved their board practices.</li>
<li>There're companies that only have good board practices but aren't generating value .Therefore, we should focus on whether they are doing actions that create value in addition to board practices.</li>
</ul>


In Japan, where there’s strong peer pressure, people are reluctant to do something before someone else does, and tend to follow the trend once the majority of formality is known.
When numbers are specified and rules are established, Japanese companies tend to scramble to match the numbers. Thus, many companies have not voluntarily improved their board practices.
There're companies that only have good board practices but aren't generating value .Therefore, we should focus on whether they are doing actions that create value in addition to board practices.


The Only Way to Know if a Company Are Improving in Real Terms Is if It Is Creating Value

<ul>
<li>Most shareholder benefits items can be used in Japan. There's history of more companies abolishing shareholder benefits programs because they believed that shareholder returns should conducted rather than shareholder benefits.</li>
<li>Amid rising foreign ownership and the dissolution of cross-shareholdings, more companies have begun to reverse the trend toward companies approaching individual shareholders with shareholder benefits programs.</li>
<li>The fact that stock prices of companies offering shareholder benefits tended to fall lower during stock market plunges may be due to the fact that they were mostly defensive stocks.</li>
</ul>


Most shareholder benefits items can be used in Japan. There's history of more companies abolishing shareholder benefits programs because they believed that shareholder returns should conducted rather than shareholder benefits.
Amid rising foreign ownership and the dissolution of cross-shareholdings, more companies have begun to reverse the trend toward companies approaching individual shareholders with shareholder benefits programs.
The fact that stock prices of companies offering shareholder benefits tended to fall lower during stock market plunges may be due to the fact that they were mostly defensive stocks.


Shareholder Benefits to Return Amid Rise in Foreign Ownership and Dissolution of Cross-Shareholdings

<ul>
<li>42 companies submitted their annual securities reports by the business day before AGM date, and most of them submitted their reports immediately before AGM, such as the day before AGM.</li>
<li>If the record date is moved forward from fiscal year-end, the problem of administrative burden will be solved. English-disclosure in annual securities reports will increase, and engagement will be positive.</li>
<li>For companies with a record date in their articles of incorporation, changing the record date would require general shareholders' meeting, but only a few shareholders would oppose the change.</li>
</ul>


42 companies submitted their annual securities reports by the business day before AGM date, and most of them submitted their reports immediately before AGM, such as the day before AGM.
If the record date is moved forward from fiscal year-end, the problem of administrative burden will be solved. English-disclosure in annual securities reports will increase, and engagement will be positive.
For companies with a record date in their articles of incorporation, changing the record date would require general shareholders' meeting, but only a few shareholders would oppose the change.


Pre-AGM Filling of Annual Securities Reports Is Plus, but May Take Long Before More Companies Do So

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)

Dissolution of Parent-Subsidiary Listing Is Just Beginning. Included Affiliates, It'll Grow Further

I would like to discuss the issues on the January 15 Nikkei article, “Aim for Parent-Subsidiary Listed Stocks, Targeting Subsidiaries of Rich...

Metrical Inc

The Only Way to Know if a Company Are Improving in Real Terms Is if It Is Creating Value

I would like to discuss the issues on the January 12 Nikkei article, “Japanese Companies That Cannot Say ‘NO’: Stopping Thinking and ‘Only Formally...

Metrical Inc

Shareholder Benefits to Return Amid Rise in Foreign Ownership and Dissolution of Cross-Shareholdings

I would like to discuss the issues on the January 12 Nikkei Newspaper article, “Shareholder Benefit Programs Rebounding, Positive for Stock Prices:...

Metrical Inc

Shareholder Benefits to Return Amid Rise in Foreign Ownership and Dissolution of Cross-Shareholdings

I would like to discuss the issues on the January 12 Nikkei Newspaper article, “Shareholder Benefit Programs Rebounding, Positive for Stock Prices:...

Metrical Inc

Pre-AGM Filling of Annual Securities Reports Is Plus, but May Take Long Before More Companies Do So

I would like to discuss the issues on the January 10 Nikkei Newspaper's Flexible Discussion on Submission of Annual Securities Report Prior to...

Metrical Inc