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>Since companies that have listed on NYSE through ADR etc have been reporting their financial results under US-GAAP, it is expected that more companies will transition to IFRS as needed.</li>
<li>If IFRS is promoted on the assumption that “eliminating the periodic amortization of goodwill under Japanese-GAAP will likely lead to increased M&amp;A,” the discussion risks heading in the wrong direction.</li>
<li>Needless to say, successfully implementing PMI to increase future profits and cash flow is both more difficult and more important.</li>
</ul>


Since companies that have listed on NYSE through ADR etc have been reporting their financial results under US-GAAP, it is expected that more companies will transition to IFRS as needed.
If IFRS is promoted on the assumption that “eliminating the periodic amortization of goodwill under Japanese-GAAP will likely lead to increased M&amp;A,” the discussion risks heading in the wrong direction.
Needless to say, successfully implementing PMI to increase future profits and cash flow is both more difficult and more important.


Have Japanese-GAAP Helped Reduce the Number of Failed M&A Deals?

<ul>
<li>Since FY2022, the NP Margin and Equity Ratio have moved in parallel, indicating that the improvement in non-operating income and expenses has directly contributed to the increase in equity.</li>
<li>Over the past few years, while sales growth driven by passing on inflationary costs has gradually boosted operating profit, the improvement in the operating profit margin has been negligible.</li>
<li>To raise profit margins to a level that can stand up to comparisons with companies in other countries, create products with high gross profit margins to increase cash flow.</li>
</ul>


Since FY2022, the NP Margin and Equity Ratio have moved in parallel, indicating that the improvement in non-operating income and expenses has directly contributed to the increase in equity.
Over the past few years, while sales growth driven by passing on inflationary costs has gradually boosted operating profit, the improvement in the operating profit margin has been negligible.
To raise profit margins to a level that can stand up to comparisons with companies in other countries, create products with high gross profit margins to increase cash flow.


The Solution Is to Improve the Gross Profit Margin and Return Excess Cash to Shareholders

<ul>
<li>There is certainly concern that, even with this revision, many companies cannot escape the process of simply checking off items to be achieved in accordance with the guidelines for interpretation.</li>
<li>Even with this latest revision to corporate governance, there is no significant difference from the approach in which regulators have been dictating even the minutest details.</li>
<li>A lack of understanding of fiduciary duties is a factor contributing to poor profitability among Japanese companies. Has this revision to the Code managed to breathe life into the framework?</li>
</ul>


There is certainly concern that, even with this revision, many companies cannot escape the process of simply checking off items to be achieved in accordance with the guidelines for interpretation.
Even with this latest revision to corporate governance, there is no significant difference from the approach in which regulators have been dictating even the minutest details.
A lack of understanding of fiduciary duties is a factor contributing to poor profitability among Japanese companies. Has this revision to the Code managed to breathe life into the framework?


Will This Revision to the Corporate Governance Code Be the Third Time’s the Charm?

<ul>
<li>As expectations are growing for individual investors to serve as “stable shareholders,” the trend of lowering minimum trading unit is beginning to spread even to companies with high stock prices.</li>
<li>The 2001 amendment to the Commercial Code, which authorized the current minimum trading unit system, neglects the rights of shareholders holding less than the minimum trading unit.</li>
<li>The issue of wealth inequality can no longer be ignored. To prevent social instability, individuals with limited assets should be given opportunities to invest, even in smaller amounts.</li>
</ul>


As expectations are growing for individual investors to serve as “stable shareholders,” the trend of lowering minimum trading unit is beginning to spread even to companies with high stock prices.
The 2001 amendment to the Commercial Code, which authorized the current minimum trading unit system, neglects the rights of shareholders holding less than the minimum trading unit.
The issue of wealth inequality can no longer be ignored. To prevent social instability, individuals with limited assets should be given opportunities to invest, even in smaller amounts.


Will They Keep Requesting a Reduction in the Minimum Investment Amount from Now On?

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Have Japanese-GAAP Helped Reduce the Number of Failed M&A Deals?

I would like to discuss the issues on the July 29 Nikkei article titled “Don’t Forget the Global Market When It Comes to Goodwill Accounting.”

Metrical Inc

The Solution Is to Improve the Gross Profit Margin and Return Excess Cash to Shareholders

I would like to discuss the issues on the July 29 Nikkei article titled “The Background Behind the Improvement in Listed Companies’ Profitability.”

Metrical Inc

Will This Revision to the Corporate Governance Code Be the Third Time’s the Charm?

I would like to discuss the issues on the August 6 Nikkei article titled “The Core of the Corporate Governance Code Revision.”

Metrical Inc

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