Japan firms see more listing-related burdens as TSE, shareholder pressure mount – Reuters poll

By Makiko Yamazaki

TOKYO (Reuters) – Most Japanese companies feel burdens related to being listed have increased amid growing pressure from shareholders and regulators for better governance and capital strategies, a Reuters monthly poll showed on Thursday.

The results reflect how listed companies have come under deeper scrutiny in Japan, where about half of them are trading below their book value, at a time listing requirements continue to tighten.

Among 155 listed respondents in the poll, 85% said they were feeling larger listing-related burdens, although a majority of them also saw benefits of having the listing status including advantages in hiring talent.

As reasons for larger burdens, 85% cited increased disclosure requirements, as the list of disclosure items has expanded in recent years to include such items as gender gaps in workforce and sustainability risks.

The Tokyo Stock Exchange’s call this year for listed companies to improve their use of capital has also weighed, with 68% of the respondents citing it as a reason for heavier burdens.

It is the first time for the question to be asked in the Reuters monthly corporate survey and gives insight into how companies are viewing the TSE’s governance push.

The bourse’s reform push, hailed by investors as a remedy to Japan’s unusually high number of chronically undervalued stocks, has sparked a slew of share buybacks, unwinding of cross-shareholdings and some management buyouts (MBO).

Faced with higher costs associated with listing, 30% of the respondents said they have recently re-examined the significance of being a listed company, while only 14 respondents said they have considered going private.

The latest poll also showed Japan’s big employers may follow this year’s bumper pay hikes with another round in 2024, as 51% said they could raise wages beyond a 2.8% rise in Japan’s core consumer prices next year.

Wage talks early next year would be closely watched as strong pay hikes are expected to help lift household spending and give the central bank the conditions it needs to finally roll back massive monetary stimulus.

Still, 60% said the degree of wage increases that would be possible would only be less than 3%, as they face ballooning energy and materials costs. This year saw average wage hikes of 3.58% among major companies.

The survey was conducted for Reuters by Nikkei Research on Nov. 21-Dec. 1, with firms responding on condition of anonymity to allow them to speak more freely.

(Reporting by Makiko Yamazaki; Editing by Chizu Nomiyama and Christopher Cushing)