As of this week I am thinking this spate of announcements may be very similar to the spate of many (i.e., 15+ different firms) that announced 偽造表示 (false labeling scandals), that suddenly happened about 5 years ago, and were announced all in the space of about one month afterwards. Here is a partial list, that […]
Below is an interview on the recent state of Corporate governance in Japan that was held early this month. The interview is between Mr. Miyajima Hideaki (Faculty Fellow, RIETI / Waseda University), interviewer and Mr. Colin Mayer (Said Business School, Oxford University), interviewee.
Mr. Mayer shares his opinions on the unique features of corporate governance in Japan, how to encourage companies to take risks, ownership structures, the role of outside directors, the comply and explain principle and the role of corporate governance in promoting strong economic performance.
”Wednesday marked a peak time for this year’s general shareholders meetings among major listed firms in the nation, with severe criticisms voiced one after another toward the management of companies involved in scandals, including Mitsubishi Motors Corp. Many shareholders also raised concerns about future business performances in response to Britain’s decision to leave the European […]
”Japanese companies appear to be steadily implementing the corporate governance code introduced by the Tokyo Stock Exchange a year ago, at least in form. Of the 2,018 firms listed on the first and second sections of the TSE, 78 percent say they are now in compliance with at least 90 percent of the principles set […]
The the news of the day is that GPIF is suing Toshiba for ＄１０ million． It is only one asset manager that is suing, almost certainly under Article 21-2 Japan securities law (FIL) which makes it very easy for plaintiffs to sue and claim a “presumed damages amount”, and then shifts the burden of proof to the defendant company (unlike US law) to disprove its negligence. The stock has come down by about 26% or so. (Interestingly, Japanese securities law in this area is much harsher than US law, which never shifts the burden of proof in such cases.)
”Arora also assembled a reliable, well-connected team of assistants and advisers within SoftBank. A weekly conference call connecting members of “Team Nikesh” in Tokyo, London, India and on the U.S. West Coast to their leader to discuss possible investments has become established practice — an arena for information to be brought in from around the world, and the merits of promising ventures debated.
One of SoftBank’s early — and often talked about — investments is Chinese e-commerce giant Alibaba Group Holding. Son funded Alibaba with 2 billion yen ($19 million at current rates) out of a fondness for founder Jack Ma, who was unknown at the time. That stake has yielded some 10 trillion yen in latent gains 14 years later. Though Son is famed for his sharp foresight, what lurks behind his investment decisions is “something akin to a hobby,” he has said. “It’s produced success on occasion, but quite a few failures as well.”
The string of resignations by CEOs, who are invariably in Japan the Representative Director as well, continues as a result of weak Boards, weak oversight from the Audit Committees and the absence of truly independent outside directors. http://asia.nikkei.com/Japan-Update/Admitting-oversight-limits-Suzuki-to-step-down-as-CEO
The FT comments on what seems to be a string of scandals in Japan. It is our opinion that such governance or compliance issues are not necessarily more frequent than in other developed nations – it is difficult to compare – , but (1) they arise from different gaps in governance and management structures; and (2) whistle-blowing is becoming more frequent in Japan.
”From carmakers and electronics groups to housebuilders and the constructors of the nation’s roads and runways, a government-led transparency drive has accelerated a record surge of accounting and data fraud scandals across corporate Japan.
”Abstract: This research describes the largest financial scandal in recent Japanese corporate history. It explains how the Toshiba scandal expanded from a relatively simple case of accounting fraud to a company-wide deceit that involved dozens of managers and three generations of top executives. There are five main causes: domineering top management, compliant middle-managers who embody the worst of the salaryman mentality, duplicitous auditors, percentage-of-completion method accounting abuse, and the secular decline in several of the company’s business lines. The research links the scandal to broader issues with corporate culture, governance, and accounting in Japan and suggests ways to improve the situation……………….”
The Yomiuri Shimbun:
”Mitsubishi Motors Corp. was found to have manipulated data to overstate the fuel economy of minicar models.
Fuel efficiency is an important element for consumers to consider when they buy cars. Falsification of such data is an extremely malicious act.
MMC overstated the fuel economy by 5 percent to 10 percent by intentionally underestimating figures concerning tire resistance and other resistance while the vehicles are in motion.