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 cause of the lower female managerial positions behind gender wage gap is clear, but even proposed amendment to the Act seem to be a detour to solve the problem.</li>
<li>What hasn't worked 40 years after the Equal Employment Opportunity Law is that there're no penalties and the environment has always been one in which it's permissible not to achieve.</li>
<li>Effort goals are cozy for both the government, which can feel sense of doing by launching effort goals, and companies that will not be blamed if they don't achieve them.</li>
</ul>


The cause of the lower female managerial positions behind gender wage gap is clear, but even proposed amendment to the Act seem to be a detour to solve the problem.
What hasn't worked 40 years after the Equal Employment Opportunity Law is that there're no penalties and the environment has always been one in which it's permissible not to achieve.
Effort goals are cozy for both the government, which can feel sense of doing by launching effort goals, and companies that will not be blamed if they don't achieve them.


Effort Goals Are Cozy for Both the Government and the Company

<ul>
<li>The fact that few companies promptly retire treasury stock is the reason for the large gap between market capitalization including treasury stock and market capitalization calculated without including treasury stock.</li>
<li>It's odd that EV/EBITDA of a company will be smaller after cancelling treasury shares than before, but this shouldn't be too much trouble for institutional investors who analyze it closely.</li>
<li>Although this gap may widen for more companies as more cross-shareholdings will be bought back with treasury stock, the increase in share repurchases is a favorable development.</li>
</ul>


The fact that few companies promptly retire treasury stock is the reason for the large gap between market capitalization including treasury stock and market capitalization calculated without including treasury stock.
It's odd that EV/EBITDA of a company will be smaller after cancelling treasury shares than before, but this shouldn't be too much trouble for institutional investors who analyze it closely.
Although this gap may widen for more companies as more cross-shareholdings will be bought back with treasury stock, the increase in share repurchases is a favorable development.


Not Promptly Retiring Treasury Stock Has Increased the Market Cap of Japanese-Style Calculations

<ul>
<li>Listed subsidiaries and affiliates are now required by the TSE to disclose their basic thoughts on their business portfolio strategy and the rationale for being listed.</li>
<li>M&amp;A is expected because Japanese companies have not taken effective steps to expand their corporate value as cash on hand is building up and ROE is sluggish.</li>
<li>M&amp;A is likely to be mostly conducted by domestic companies or investment funds as a result of industry restructuring and business portfolio restructuring in Japan.</li>
</ul>


Listed subsidiaries and affiliates are now required by the TSE to disclose their basic thoughts on their business portfolio strategy and the rationale for being listed.
M&amp;A is expected because Japanese companies have not taken effective steps to expand their corporate value as cash on hand is building up and ROE is sluggish.
M&amp;A is likely to be mostly conducted by domestic companies or investment funds as a result of industry restructuring and business portfolio restructuring in Japan.


M&As Due to Restructuring of Business Portfolios Have Finally Begun to Increase

<ul>
<li>While the homework imposed on companies has been increasing year by year, TSE's market restructuring and “request to raise P/B” have made companies directly aware of the cost of listing.</li>
<li>MBO is a company's choice to go private as a result of the cost of maintaining a public listing. Many companies have yet to reach this conclusion.</li>
<li>The conversion of listed subsidiaries into wholly owned subsidiaries is a conclusion that has finally been reached; 230 listed subsidiaries will have to come to some conclusion eventually.</li>
</ul>


While the homework imposed on companies has been increasing year by year, TSE's market restructuring and “request to raise P/B” have made companies directly aware of the cost of listing.
MBO is a company's choice to go private as a result of the cost of maintaining a public listing. Many companies have yet to reach this conclusion.
The conversion of listed subsidiaries into wholly owned subsidiaries is a conclusion that has finally been reached; 230 listed subsidiaries will have to come to some conclusion eventually.


Going Private Is Not a Problem for a Special Company, but a Common Problem for All Listed Companies

<ul>
<li>Besides not showing concrete measures to increase corporate value, the feasibility of the plan and the valuation at that time are often not verified, so disclosures that don't add up.</li>
<li>Listed subsidiaries and equity method affiliates account for 31.8% of all listed companies. The company is still in the process of restructuring its business portfolio.</li>
<li>The growth of each company's corporate value and stock market capitalization will be determined by how quickly issues that have not been initiated so far are resolved.</li>
</ul>


Besides not showing concrete measures to increase corporate value, the feasibility of the plan and the valuation at that time are often not verified, so disclosures that don't add up.
Listed subsidiaries and equity method affiliates account for 31.8% of all listed companies. The company is still in the process of restructuring its business portfolio.
The growth of each company's corporate value and stock market capitalization will be determined by how quickly issues that have not been initiated so far are resolved.


Companies Should Consider All Options, Not Just Maintaining Their Listing

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)

Effort Goals Are Cozy for Both the Government and the Company

I would like to discuss the January 6 Nikkei article, “10 years after Women's Empowerment Promotion Act, the % of managerial positions is not...

Metrical Inc

Not Promptly Retiring Treasury Stock Has Increased the Market Cap of Japanese-Style Calculations

I would like to discuss the issues on the December 29 Nikkei Shimbun article, “40 Trillion Yen Raised by Treasury Stock: Beware of ‘One-Product,...

Metrical Inc

M&As Due to Restructuring of Business Portfolios Have Finally Begun to Increase

I would like to discuss the issues on the January 9 Nikkei article, “Japanese Corporate M&A: Largest Number in 2024 Due to Active Acquisitions by...

Metrical Inc

Going Private Is Not a Problem for a Special Company, but a Common Problem for All Listed Companies

I would like to discuss the issues on the Nikkei Shimbun article of December 16, “The Significance of Listings Questioned by the Market: Largest...

Metrical Inc

Companies Should Consider All Options, Not Just Maintaining Their Listing

I would like to discuss the issues on the January 6 Nikkei Shimbun article, “Publication of TSE's ‘Collection of Bad Practices’ Calls for European...

Metrical Inc