Tokyo Stock Exchange Shifts Focus to Investor-Company Dialogue for Sustainable Growth

The Tokyo Stock Exchange (TSE) is shifting its focus toward fostering meaningful communication between companies and investors rather than dictating how businesses should operate, according to its head. On Thursday, Hiromi Yamaji, CEO of Japan Exchange Group, which manages the TSE, stated during a press briefing in Tokyo that the true influence for change lies with investors and shareholders.

Yamaji emphasized that while the exchange’s initiatives to enhance corporate governance and boost corporate value have contributed to the strong performance of domestic stocks—evidenced by the Nikkei share average reaching a 34-year high earlier this year—forcing companies to alter their management practices could be counterproductive, as it might trigger resistance. He noted that reforms are unlikely to be enduring unless businesses take the initiative themselves.

Earlier this year, the TSE started publishing a list of companies outlining their plans to improve capital allocation and enhance corporate value, a move perceived by many as a way to pressure firms that had not disclosed such plans. By the end of September, 80% of the companies on the exchange’s prime market had submitted these plans.

Looking ahead to next year, the TSE intends to refine the list by spotlighting firms that actively engage in dialogue with investors. In addition, the exchange will share examples of both effective and poor shareholder engagement to guide companies.

Yamaji also highlighted that investors have a responsibility to engage with companies with a long-term perspective rather than focusing on short-term profits. The TSE’s goal, he reiterated, is to promote sustainable growth and long-term improvements in corporate value.

He further expressed his hope that Japan’s Prime Minister, Shigeru Ishiba, would advance policies aimed at boosting private sector growth while continuing the previous administration’s efforts to shift more capital from savings into investments.

Have you read?
Countries Most in Debt to the International Monetary Fund (IMF).
Most Successful Unicorn Startups.
$100 Billion Club: Richest People With The 12-Figure Fortunes.
Largest electricity consumers in the world, by country (in terawatt-hours).
Countries that Export the Most Goods and Services.