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The chief of Japan’s stock exchange, Hiromi Yamaji, has announced a significant shift in the country’s corporate landscape. Yamaji stated that fewer companies are listing “aimlessly” as a result of the exchange’s corporate governance drive and rising shareholder activism.
In a recent interview with the Financial Times, Yamaji highlighted the changing mindset of companies in Japan. He noted that in the past, companies would list simply for prestige, but now, with increased expectations from shareholders and a push for improved corporate governance, the landscape is evolving.
Yamaji, who took over JPX in 2023, implemented a radical “name and shame” regime earlier this year to drive better valuations, particularly for companies with a price-to-book ratio of less than one. This move has already had a significant impact, with 34% of Topix 500 companies falling into this category as of May.
The exchange’s efforts, combined with a weak yen and geopolitical tensions diverting investors from China to Japan, have led to a surge in buyouts in the country. Companies like Benesse Holdings and Shidax have announced plans to go private, signaling a shift in the market.
Yamaji emphasized that companies choosing not to list or opting to go private is a positive sign, indicating that they may return stronger after improving their operations. He also highlighted the success of the exchange’s campaign, with a majority of listed companies complying with requests to raise their valuations.
Looking ahead, Yamaji is prepared to do more to encourage improvements in corporate governance. He plans to publish anonymous case studies of companies failing to address governance concerns and has proposed new rules for the Topix index that could further reduce the number of listed companies.
Overall, the changes in Japan’s corporate landscape reflect a growing focus on shareholder activism and improved governance. Executives are facing increasing pressure, with shareholder support dwindling for some prominent figures. Yamaji sees this as a positive development, indicating progress in the country’s corporate governance practices.
