As pressure from the TSE and shareholders grows, Japanese firms face more burdens associated to listing

 As pressure from the TSE and shareholders grows, Japanese firms face more burdens associated to listing

December 7, TOKYO (Reuters) - According to a Reuters monthly poll released on Thursday, the majority of Japanese firms believe that the cost associated with listing has grown due to mounting demand from shareholders and authorities for improved governance and capital plans.

Nearly half of the listed businesses in Japan trade below their book value, indicating that the country's tighter listing standards have resulted in a high level of scrutiny.

Out of the 155 participants in the poll, 85% reported feeling more burdened by the listing, although the majority also saw advantages associated with listing status, such as better access to talent for recruiting.

Because the list of disclosure topics has grown in recent years to include things like gender disparities in the workforce and sustainability concerns, 85% of respondents mentioned increasing disclosure obligations as the reason for the heavier load.

This year has also seen a decline in calls for Tokyo Stock Exchange (8697.T)-listed businesses to improve their use of capital, with 68% of respondents viewing it as a significant burden.

This is the first time that Reuters' monthly corporate poll has posed this particular question, which sheds light on how businesses see the governance of the TSE.

A response to the abnormally high quantity of cheap stocks in Japan's stock market, investors' calls for reform have resulted in share buybacks, a halt to cross-shareholdings, and a few management buyouts (MBOs).

Only 14 respondents said they had thought about going private, however 30% of respondents stated they have lately reevaluated the value of being a public firm due to the increased expenses associated with listing.

According to the most recent study, 51% of major companies in Japan predicted that core consumer prices will increase by 2.8% in 2024, after this year's massive pay raise. able to raise pay more than a rise.

Early in the new year, pay negotiations will be widely observed since robust wage growth is anticipated to encourage household spending and provide the framework for the central bank to finally remove significant monetary support.

However, 60% of them said that because of growing energy and material prices, the pay rise would only be less than 3%. Major corporations experienced an average wage rise of 3.58% this year.

Nikkei Research carried out the poll for Reuters between November 21 and December 1. In order to give the firms greater freedom to express themselves, they answered on the condition of anonymity.