Category

ESG

Aug 05
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Both the Reduction in Cash on Hand and the Reduction in Policy-Held Shares Are Still Underway and more

By | Daily Briefs, ESG

In today’s briefing:

  • Both the Reduction in Cash on Hand and the Reduction in Policy-Held Shares Are Still Underway

Both the Reduction in Cash on Hand and the Reduction in Policy-Held Shares Are Still Underway

By Aki Matsumoto

  • Listed companies have accumulated a great deal of cash over the years, so they are more than capable of balancing growth investments with shareholder returns.
  • Since Net Profit Margin remains slower than Operating Profit Margin, this may be a sign that companies will book extraordinary losses and embark on business restructuring leading to future profits.
  • Asset turnover has not improved. Not only have shareholder returns increased only in proportion to the rise in cash flow, but the cross-shareholding program is still in its early stages.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Aug 03
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Are Investors Prepared for the Upcoming Formalization of Corporate Governance Practices? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Are Investors Prepared for the Upcoming Formalization of Corporate Governance Practices?

Are Investors Prepared for the Upcoming Formalization of Corporate Governance Practices?

By Aki Matsumoto

  • If the revised Corporate Governance Code requires Prime market-listed companies to have majority independent outside directors, issues regarding outside directors’ concurrent positions and long tenures may become more prominent.
  • The real reason hiring at companies with statutory nomination committee etc. isn’t progressing is that internal leadership cannot accept the decisions made by nomination committee, which carry legal enforceability.
  • As more companies establishing statutory nomination committees increases and corporate governance practices become more formalized at many companies, investor engagement will play an even more critical role than ever before.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Aug 01
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: A Crossroads: Should a Company Strive to Meet Formal Criteria and more

By | Daily Briefs, ESG

In today’s briefing:

  • A Crossroads: Should a Company Strive to Meet Formal Criteria, or Move to Standard Market Instead?

A Crossroads: Should a Company Strive to Meet Formal Criteria, or Move to Standard Market Instead?

By Aki Matsumoto

  • Changes to laws and regulations may lead to more companies having majority independent directors, which could result in more companies transitioning to Company with US-style three-committee structures.
  • There’re concerns about whether outside directors could effectively fulfill roles if more companies have majority of outside directors. In reality, this likely depends on the case-by-case circumstances of each company.
  • Rather than compromising the quality of outside directors just to meet formal requirements, companies would be better off abandoning those requirements and moving from Prime Market to Standard Market.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 31
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: There Is Concern that Meeting Formal Criteria Is Being Prioritized Here as Well and more

By | Daily Briefs, ESG

In today’s briefing:

  • There Is Concern that Meeting Formal Criteria Is Being Prioritized Here as Well

There Is Concern that Meeting Formal Criteria Is Being Prioritized Here as Well

By Aki Matsumoto

  • Corporate Governance Code stipulates that board members should limit concurrent positions to reasonable number and requires disclosure; however, over 400 peoples at listed companies hold concurrent positions at over 3.
  • While there are expectations to appoint outside directors with management experience, increasing the proportion of female board members is currently being prioritized over that.
  • While an outside director who has served for many years may have developed good rapport with the executive officers, from shareholders’ perspective, this does not necessarily serve their best interests.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 30
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Although Executive Compensation Has Improved and more

By | Daily Briefs, ESG

In today’s briefing:

  • Although Executive Compensation Has Improved, Many Managers Still Seem Hesitant to Take Risks

Although Executive Compensation Has Improved, Many Managers Still Seem Hesitant to Take Risks

By Aki Matsumoto

  • An increase in % of variable compensation in executive compensation, linked to medium-to-long-term performance targets, is expected to foster shareholder-oriented management and lead to growth of shareholder value over time.
  • Some caution is needed when executive compensation is linked to TSR. The key is to ensure that executive incentive compensation is determined based on combination of medium-to-long-term performance and TSR.
  • Although the proportion of performance-based and incentive compensation has been gradually increasing, it seems that many executives are still hesitant to take risks to create value.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 28
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: There Aren’t Many Companies Where Discipline Is Effectively Applied to Determine Cash Allocation and more

By | Daily Briefs, ESG

In today’s briefing:

  • There Aren’t Many Companies Where Discipline Is Effectively Applied to Determine Cash Allocation

There Aren’t Many Companies Where Discipline Is Effectively Applied to Determine Cash Allocation

By Aki Matsumoto

  • When a practice that was previously adopted by few companies becomes widely adopted, the impact of that practice tends to diminish.
  • Cash allocation, which is critical to the growth of corporate value, should be determined based on the company’s cash flow, cash position, and growth plans.
  • At the same time, recognizing that free cash flow belongs to shareholders, any excess cash remaining after cash allocation decisions have been made should be returned to shareholders.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 26
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: While Companies Buy Time Before Executing Fundamental Measures and more

By | Daily Briefs, ESG

In today’s briefing:

  • While Companies Buy Time Before Executing Fundamental Measures, Shareholder Proposals Keep Rising

While Companies Buy Time Before Executing Fundamental Measures, Shareholder Proposals Keep Rising

By Aki Matsumoto

  • An increase in the approval rate for shareholder proposals and a decrease in the approval rate for management proposals will influence the company’s subsequent policies.
  • Thanks to TSE’s educational initiatives, there’s been an increase in shareholder proposals that address management issues raised by activist investors. This is expected to encourage companies to implement fundamental reforms.
  • However, with most shareholder proposals being rejected, there may be companies that are buying time by increasing shareholder returns until they can implement radical measures that carry significant risk.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 24
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: For Small to Med-Sized Companies and more

By | Daily Briefs, ESG

In today’s briefing:

  • For Small to Med-Sized Companies, the Resolution of Cross-Shareholdings Is Just Getting Started

For Small to Med-Sized Companies, the Resolution of Cross-Shareholdings Is Just Getting Started

By Aki Matsumoto

  • An increasing number of domestic asset management companies are treating shares reclassified as “shares held for trading” as policy holdings and exercising their voting rights accordingly.
  • The practice of reclassifying shares as “shares held for trading” to make policy-held shares appear smaller is a phenomenon typical of the transitional period during which cross-shareholdings are being unwound.
  • As evidenced by the renewed focus on strategic holdings following the revision of the Corporate Governance Code, the issue of cross-shareholdings remains a challenge for listed companies going forward.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 22
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: Why Aren’t More AGMs Being Held Online? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Why Aren’t More AGMs Being Held Online?

Why Aren’t More AGMs Being Held Online?

By Aki Matsumoto

  • “Using digital methods for notice of AGM” benefits both companies and shareholders. Meanwhile, the website—which should contain detailed information—should feature the full set of documents in both Japanese and English.
  • I don’t believe that simply amending the law will lead to an increase in online AGMs that allow shareholders to ask questions and vote.
  • Avoiding opportunities for dialogue with shareholders at the AGM not only means forfeiting those opportunities but also amounts to disregarding the AGM, which is the highest decision-making body.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free


Jul 20
0
Smartkarma The Investment Intelligence Platform

Daily Brief ESG: While % of Female Board Members Has Risen and more

By | Daily Briefs, ESG

In today’s briefing:

  • While % of Female Board Members Has Risen, Now Is Time to Ask Whether Companies Are Creating Value

While % of Female Board Members Has Risen, Now Is Time to Ask Whether Companies Are Creating Value

By Aki Matsumoto

  • The issue of a lack of female management positions—and consequently, a shortage of female internal board members—is a deep-rooted problem that cannot be solved by individual companies alone.
  • The question is whether companies that have met their targets for the proportion of female board members are creating value and demonstrating superior returns on capital and stock price performance.
  • Regarding the proportion of female board members, the correlation with value creation indicators has weakened somewhat compared to when only a small number of companies had appointed female board members.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free