Aki MATSUMOTO, CFA, MBA’s Post

I would like to discuss the "Points and Examples of 'Management Conscious of Cost of Capital and Stock Price' from Investors' Perspective

I would like to discuss the issues on the December 26 Nikkei article, "Prime Listed Companies' Earnings Per Share at Record High."

I would like to discuss the issues on the TSE's March 31st disclosure document by TSE, "Measures to Achieve Management Conscious of Cost of Capital and Stock Prices."

I would like to discuss the issues on the December 25 Nikkei article, "European money in 'dissolution of parent-subsidiary listings': Hitachi's blueprint for higher stock prices."

I would like to discuss the issues on the April 9 Nikkei Shimbun article, "Screening in TSE Prime Market: 20% Decrease in Number of Companies in 2 Years after Market Restructuring."

I would like to discuss the issues raised in the TSE's January 15 disclosure on "Measures to Achieve Management Conscious of Cost of Capital and Stock Prices."

I would like to discuss the issues on the March 4 Nikkei article, "Top Analysts' Focus: Expectations for Enhanced Shareholder Returns."

(1) Although few shareholder proposals will be passed, companies that receive shareholder proposals and don't like the attention are likely to seek compromise and come to terms with shareholders before AGM. (2) Companies with low valuations have significantly lower ROE, ROA, market capitalization, and foreign ownership. In order to raise valuations, the first step should be to increase return on capital. (3) Companies with higher valuations can be expected to have begun to steer their board operations in an improved direction. Policy shareholding reductions can be considered as seriousness toward management improvement.

I would like to discuss the issues on the analysis in groups of companies that have large shareholders and those that do not, and what characteristics and tendencies they have.

As for the May 27 Nikkei article, "FSA to Investigate Appropriate Disclosure of Policy Shareholdings, Targeting All Listed Companies", (1) The problem with cross-shareholdings is not simply that they weigh heavily on ROE and ROA improvement, but also that they do not create tension in management. (2)The degree of seriousness of the company's efforts to reduce policy shareholdings is a measure of the improvement in return on capital. The level of seriousness must be monitored. (3) The fact that there are inappropriate entries in the items required of prime market listed companies indicates that many companies are not suitable for prime market listed companies.