Investors In Japanese Companies Want Transparency In Decision-Making

Matty-Sways

Japanese companies are facing pressure to make their boards less insular and to redistribute profits.

A recent study looked at the performance of companies in Japan on the basis of the makeup of their board of directors. Researchers compared companies with external members on their board of directors to companies that did not have external board members. Financially, those who had external board members performed better.

This reality has been the catalyst for efforts amongst shareholders to mobilize and gain more agency in helping run the companies that they have invested in. Shareholders are asking for more transparency as to how the company is run and how the board of directors is populated.

For example, the Murukami family has been organizing to acquire Toshiba, in an effort to make it more transparently run. The company is currently sitting on $456 million in reserves. The Murukamis want a larger say amongst shareholders on how that money is reinvested in the company or redistributed back to shareholders.

Generally, progress is being made, the number of companies in Japan with two or more external directors has increased by three times the initial amount in the past five years.

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Economics, Finance and Investing

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