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.

The Cleanup Left over from the Bubble Economy’s Heyday Is Finally Coming to an End

Managers Will Be Asked Whether They Explained to Investors Why Equity Financing Is the Best Option

The New Expectations for Individual Investors Go Hand in Hand with Caution Toward Activist Investors

Stock Prices Driven by Expectations Require Support from Actual Corporate Performance

Japanese Stocks, Despite Liquidity Challenges, Offer Many Investment Targets for Activist Investors

To Raise the P/B of Listed Companies, the ROE of Half of Them Must Be Lifted Above the Threshold

How Long the Time-Killing Tactics of Companies with Average Foreign Ownership Can Last?

Unless Companies Are Delisted Even if They Change Markets, the Quality of Tokyo Market Won't Improve

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

<ul>
<li>A vague relationship can be seen between ROE and P/B. The relationship between ROE and P/B appears stronger when using the past three years' ROE, which has less variation.</li>
<li>There's no clear ROE threshold that marks the boundary for P/B of 1.0x. If seeking P/B 1.0x breakpoints, past 3-year average ROE and projected ROE are 6% and 7%, respectively.</li>
<li>Increasing ROE makes sense for expanding corporate value, but importantly, the path to expanding corporate value must be explained based on cash flow, considering future expenses and investments.</li>
</ul>


A vague relationship can be seen between ROE and P/B. The relationship between ROE and P/B appears stronger when using the past three years' ROE, which has less variation.
There's no clear ROE threshold that marks the boundary for P/B of 1.0x. If seeking P/B 1.0x breakpoints, past 3-year average ROE and projected ROE are 6% and 7%, respectively.
Increasing ROE makes sense for expanding corporate value, but importantly, the path to expanding corporate value must be explained based on cash flow, considering future expenses and investments.


Updating the Relationship Between P/B and ROE

TSE Tokyo Price Index TOPIX

Updating the Relationship Between P/B and ROE