Discussion Forum

September 20th “Director Boot Camp” – Another Successful Program! Next Course: November 22nd

On September 20th, BDTI held its English Director Boot Camp , attended by a number of highly experienced participants. Participants from various companies heard lectures about corporate governance by Nicholas Benes and Andrew Silberman of AMT, and exchanged experiences and opinions at a spacious, comfortable room kindly donated for our use by Cosmo Public Relations, a leading communications and PR firm in Tokyo.

We are planning to hold the next course on Thursday, November 22nd. Sign up early!

Japan CG Top20 Stock Performance: Gap with Market Indices Widens (August 2018)

CG Top 20 stocks continued solid performance in August

August stock prices have continued low trading volume. Topix and JPX400 indices tumbled in the middle of the month, but recovered toward the month end. Meanwhile, CG Top 20 prices also recovered their losses toward the end of the month. The gap between CG quality stocks and the market indices is widening. The stock price charts for in the indices and the composite of CG top 20 companies are shown in the following link.

All About Board Portals – A primer through the lens of Boardvantage

Board portals have established themselves as a must-have in board communications. The current generation allows boards to go entirely paperless.

A board portal is a secure app or website designed specifically for the purpose of improving communication between a company and its directors. The current generation allows boards to go entirely paperless.

Contents

  • Board Portals: An Overview
  • Evolution of the Board Portal
  • What to Look for in Board Portal Technologya
  • Ready to Learn More?

“What do the Japanese think of non-Japanese CEOs of Japanese companies?” – (One Answer)

by Hide Izumi

I have had the honor of working directly with a few, and I think they bring something to the table that is badly lacking right now in this country.

It is a mean but common joke that “world’s strongest army would be run by American generals, German officers and Japanese soldiers.” For me, it really isn’t funny, because it points to a fundamental problem in this country that has been a constant – lack of competent high level leadership.

Value proposition of integrated reporting and the price-book ratio model: Evidence from Japan

by Dr. Ryohei Yanagi, CFO, Eisai and Visiting Professor, Waseda University

How can we connect non-financial capitals and corporate value? A new book, ‘Corporate Governance and Value Creation in Japan‘, which was launched in May 2018 as my first English book, provides a conceptual framework for integrating intangibles with ROE as well as empirical evidence and case studies supporting this model.  (Here is the Japanese version of this book.)

Inconvenient truth: No meaningful value creation although Japanese companies tout ESG

In Japan, ESG and non-financial reporting are booming with 341 listed companies, according to KPMG, having adopted integrated reporting in 2017. Japanese corporate managers are traditionally inclined to tout their companies’ intangibles such as human resources and social contribution rather than financial metrics like ROE.

In recent years, however, Japan’s PBR (price-book value ratio: market capitalization to equity book value) has been stagnant and hovering around one without meaningful “market value added” (MVA, market cap above equity book value).

BDTI Update to Supporters, June 2018

Notes: (1) On this page (at top right), you can sign up to receive our English Newsletter; (2) Sign up to receive the (separate) Japanese Newsletter here; (3) Anyone can support the “SEO” of our web site simply by mentioning BDTI on any web page with a link to this page; (4) For details about the chart, see the overview materials.

” Dear Supporter:   I am writing to update you, and to respectfully ask you or your institution to make a donation of 300,000 Yen or more this year, either as a Sustaining Donor or as a Corporate Participating Member. (As explained below in section 5, the latter category now allows donors which are investing institutions to receive 40% discounts on all BDTI courses/seminars that are open to the public, and to share these discounts with companies in their portfolio.)

TBS is Not the Only One – 33 Other Major Companies with Large Investments in Securities

In light of the attention AVI’s shareholder proposal is drawing toward TBS’ huge “non-core” shareholdings in Tokyo Electron, and the light this is shedding on the continued practice of cross-shareholdings in Japan, we thought it would be helpful to screen for companies with similar characteristics.

AVI’s argument draws on solid corporate finance principles that companies should not be diversifying for shareholders when they can do so for themselves in a more efficient manner. Moreover, even when the company is suited toward asset management and has a solid track record for this (e.g., Softbank), investors expect to see behavior that shows that the (quasi) asset manager is exercising judgement as such on an ongoing basis. In other words, the company should exhibit buying and selling activity dictated by profitability and outside forces. In such cases, shareholders tend to view and value the company more as an asset manager than as a company in the originally-stated industry, and therefore expect such behavior.

TSE: “Publication of Revised Japan’s Corporate Governance Code”(2018.06.01)

“Tokyo Stock Exchange, Inc. (TSE) has partially revised the Securities Listing Regulations pertaining to the revision of Japan’s Corporate Governance Code (hereinafter the “Code”) (*) with effect from June 1, 2018.
This revision is based on the proposals made by the Council of Experts Concerning the Follow-up of Japan’s Stewardship Code and Japan’s Corporate Governance Code (hereinafter the “Council”). Jointly operated by the Financial Services Agency and TSE, the Council made proposals to revise the Code in order to advance governance reform not just in form but also in substance through dialogue between companies and investors.

May 22nd “Director Boot Camp” – Another Successful Program! Next Course: Sep 20th

On May 22nd, BDTI held its English Director Boot Camp , attended by a number of highly experienced participants. Participants from various companies heard lectures about corporate governance by Nicholas Benes and Andrew Silberman of AMT, and exchanged experiences and opinions at a spacious, comfortable room kindly donated for our use by Cosmo Public Relations, a leading communications and PR firm in Tokyo.

We are planning to hold the next course on Thursday, September 20th. Sign up early!

BDTI/METRICAL CG Research Update: “Linkage between CG Practice and Value Creation”

BDTI and METRICAL collaborate on researching the linkage between CG practices sand value creation. We have recently released our updated analysis as of April 2018 for the roughly 1,800 publicly traded companies with market capitalization exceeding about JPY10 billion.

In this analysis, by examining board practices (CG guidelines, practices, and composition of the Board of Directors) and specific actions (real actions by a company) separately, we try to identify statistically significant correlations with financial performance measures (ROE, ROA, Tobin ‘s q) for each of these respectively – i.e, for, board practices and action respectively.

We have observed a certain degree of improvement in board practices since the introduction of the Corporate Governance Code.  However, assuming that one of the key goals of the corporation is value creation, in order to improve the effectiveness of engagement and stewardship it is very important to regularly analyze the way in which such improvement (and specifically, which improvements) appears to lead to value creation.

We can summarize the results of our recent analysis as follows: