Daily BriefsJapan

Japan: Sakai Heavy Industries, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

  • Japan’s Governance: A Simple Question and Purpose of Improving Governance to Secure Prime Market
  • Japan’s Governance: TOPIX Reform

Japan’s Governance: A Simple Question and Purpose of Improving Governance to Secure Prime Market

By Aki Matsumoto

Will it seem surprising or boring to readers who live outside of Japan? This is a question that I have been asking myself for quite some time. It is that not a small number of Japanese managers confuse “compliance” with “governance. In my actual experience, there were some executives who said “there is a problem with governance” when a problem similar to a violation of rules occurred (in fact, violations occurred in many cases). There are also cases where compliance with laws and regulations is raised in the ESG explanations in financial results announcements (although compliance is indeed a rule that should be followed by management and employees as the basis for corporate governance).


Japan’s Governance: TOPIX Reform

By Aki Matsumoto

The Tokyo Stock Exchange announced on April 30 that it will reform TOPIX in conjunction with the TSE’s market reorganization. As I have mentioned several times in previous articles, TOPIX will be reformed to exclude stocks that do not meet the market capitalization criteria after October 2022, and to “select” stocks based on certain criteria, rather than including all stocks listed on the market as the current index does, in order to improve the quality of the index. One source says that the S&P 500 will be included. According to one view, the new TOPIX will be modeled after the S&P 500. It is more important to pay attention to this method of “selection” based on certain criteria.


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