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.

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.

<ul>
<li>We need to watch carefully to see whether cash flow will subsequently increase in the projects that the CB issuers have invested their proceeds in.</li>
<li>Share prices of companies that announce equity financings, including CBs, usually decline. Besides the dilution, another aspect is the effect of the company's announcement of the sale of its shares.</li>
<li>In the case of CBs, the company should keep in mind that it sold the conversion rights of its shares for less than their actual call option value.</li>
</ul>


We need to watch carefully to see whether cash flow will subsequently increase in the projects that the CB issuers have invested their proceeds in.
Share prices of companies that announce equity financings, including CBs, usually decline. Besides the dilution, another aspect is the effect of the company's announcement of the sale of its shares.
In the case of CBs, the company should keep in mind that it sold the conversion rights of its shares for less than their actual call option value.


Although the Cost of Capital for CBs Should Be Considered Much Higher than for SBs

<ul>
<li>Few companies file their annual securities reports prior to AGM, and since they are filed 1-2 days prior to AGM, there's insufficient time for a thorough review of useful information.</li>
<li>Profitable companies that gain the support of overseas investors further increase their return on capital through engagement, and the gap between them and those that don't will continue to widen.</li>
<li>Since reducing policy shareholdings will reduce the percentage of voting rights that unconditionally favor company proposals, engagement will be more effective and speed up the process of management improvement.</li>
</ul>


Few companies file their annual securities reports prior to AGM, and since they are filed 1-2 days prior to AGM, there's insufficient time for a thorough review of useful information.
Profitable companies that gain the support of overseas investors further increase their return on capital through engagement, and the gap between them and those that don't will continue to widen.
Since reducing policy shareholdings will reduce the percentage of voting rights that unconditionally favor company proposals, engagement will be more effective and speed up the process of management improvement.


What Is Needed for More Engagement to Be Effective Is to Reduce Policy Shareholdings

<ul>
<li>The fact that institutional investors consider whether a company has zero female board members when voting has led to decrease in the number of companies with zero female board members.</li>
<li>Since fewer companies have zero female board members but a minority of companies have at least two female board members, achieving 30% female board members seems somewhat of a hurdle.</li>
<li>While tenure and concurrent service of female board members are problematic, the starting point is to ensure that women have  a 30% voice on the board and to promote diversity.</li>
</ul>


The fact that institutional investors consider whether a company has zero female board members when voting has led to decrease in the number of companies with zero female board members.
Since fewer companies have zero female board members but a minority of companies have at least two female board members, achieving 30% female board members seems somewhat of a hurdle.
While tenure and concurrent service of female board members are problematic, the starting point is to ensure that women have  a 30% voice on the board and to promote diversity.


The Goal of 30% Female Board Members Is Somewhat Hard to Achieve Given the Current Situation

<ul>
<li>High ratio of female non-regular workers and low ratio of women in management positions are factors behind the gender wage gap. Government expects to correct the gap in individual companies.</li>
<li>Companies should improve making it easier for employees returning jobs after temporary leave for childcare/childbirth, and treating them in the same position they were before leaving after temporary leave.</li>
<li>In order for women to have access to higher education and for women to work without leaving the workforce temporarily, the values that endorse gender inequality must be removed.</li>
</ul>


High ratio of female non-regular workers and low ratio of women in management positions are factors behind the gender wage gap. Government expects to correct the gap in individual companies.
Companies should improve making it easier for employees returning jobs after temporary leave for childcare/childbirth, and treating them in the same position they were before leaving after temporary leave.
In order for women to have access to higher education and for women to work without leaving the workforce temporarily, the values that endorse gender inequality must be removed.


In Addition to Efforts by Individual Companies Values Endorsing Gender Inequality Must Be Removed

<ul>
<li>Since Japan's gender gap index ranks 118th out of 146 countries, stagnating in the lower group, it will take a considerable amount of time to resolve the issue.</li>
<li>A shortcut to the improvement of women's status is to greatly improve the gender ratio in the legislature in order to change the current framework for improving women's status.</li>
<li>Behind the lagging 103rd place in the ratio of female managers is the lack of progress in higher education for women.</li>
</ul>


Since Japan's gender gap index ranks 118th out of 146 countries, stagnating in the lower group, it will take a considerable amount of time to resolve the issue.
A shortcut to the improvement of women's status is to greatly improve the gender ratio in the legislature in order to change the current framework for improving women's status.
Behind the lagging 103rd place in the ratio of female managers is the lack of progress in higher education for women.


Women's Empowerment in Japan Will Still Take a Considerable Amount of Time

Executive Director, Co-head of CG Research, Metrical Inc.
METRICAL INC. is a corporate governance(CG)research, investment research and consulting firm in Japan, offering a full service CG research and solutions to investors, public companies and other wide range of organizations globally. http://www.metrical.co.jp/

Aki Matsumoto
Executive Director
• Metrical Inc

Although the Cost of Capital for CBs Should Be Considered Much Higher than for SBs

I would like to discuss the issues on the June 12 Nikkei article, "Growth Investment Swells as Stock Market Rises; Convertible Bond Issuances...

Metrical Inc

What Is Needed for More Engagement to Be Effective Is to Reduce Policy Shareholdings

I would like to discuss the issues on the June 11 Nikkei Shimbun article, "Shareholders' Meeting, Heated Debate with Shareholders on Shareholder...

Metrical Inc

The Goal of 30% Female Board Members Is Somewhat Hard to Achieve Given the Current Situation

I would like to discuss the issues on the article of Nikkei Shimbun published on June 12, "Board Diversity is a 'Must'."

Metrical Inc

In Addition to Efforts by Individual Companies Values Endorsing Gender Inequality Must Be Removed

I would like to discuss the issues on the June 12 Nikkei article, “Gender Equality: Japan Ranks 118th; Eliminating Wage Gap is Key to Surge."

Metrical Inc

Women's Empowerment in Japan Will Still Take a Considerable Amount of Time

I would like to discuss the issues on the June 12 Nikkei article, “Japan's Gender Equality Index Ranks 118th: Politics Improves, Women's Status...

Metrical Inc