In a recent monthly corporate poll conducted by Reuters, Japanese companies voiced significant concerns about the Tokyo Stock Exchange’s (TSE) planned requirement for top-tier firms to disclose key financial statements in English. This move, aimed at enhancing capital efficiency and corporate governance, has been met with apprehension, with a staggering 91% of respondents viewing it as burdensome. The pressure on listed firms is palpable, as many are still deliberating on how to respond to the TSE’s capital efficiency improvement drive.
The Japan Exchange Group (JPX) has been proactive in promoting enhanced corporate governance, introducing initiatives like the Prime market in April 2022 and urging firms to disclose long-term plans for improving capital efficiency, particularly those trading below book value.
According to the April survey, over half of the respondents are considering establishing systems to facilitate disclosure in both Japanese and English by April 2025, when bilingual disclosure becomes mandatory for approximately 1,600 firms on the Prime market. However, this poses challenges for more than a quarter of respondents, while just under a fifth have already implemented such systems.
Responding to the capital efficiency drive, 53% of firms are still deliberating on measures to take. Priorities include activities like bolstering investor relations and investing for growth. Additionally, 48% are looking to enhance shareholder returns, while a quarter are contemplating restructuring their business portfolios to align with the new requirements.
The poll also shed light on the impact of new annual overtime limits for truck drivers, which came into effect on April 1. A significant majority of firms (87%) anticipate or are already experiencing an impact from these limits. Responses range from collaborating with transportation companies to reviewing delivery routes and schedules, with some firms considering passing on costs through price increases.
Conducted by Nikkei Research from April 3-12, the survey collected responses from 400 firms, ensuring anonymity to encourage candid feedback. Overall, the findings underscore the complex challenges and strategic considerations facing Japanese companies as they navigate evolving regulatory and market dynamics, striving to maintain competitiveness while adhering to new mandates.