Corporate Governance Survey for Japanese Companies Listed on the Tokyo Stock Exchange

Phase 2 Survey Report (2019–)       Phase 1 Survey Report (2002–2017)

As a nonprofit research institution, the Japan Corporate Governance Research Institute (JCGR) started a corporate governance survey in March 2002 for all companies listed on the First Section of the Tokyo Stock Exchange Stock Market.

However, with the advent of Abenomics in 2012, the corporate environment regarding corporate governance changed dramatically. In spite of the change, in order to capture the time-series changes in corporate governance of Japanese companies, JCGR kept changes in questionnaires to a minimum.

JCGR decided to revise the questions of the JCGIndex survey, making the most of the opportunity of JCGR’ separation from the Corporate Governance Network (CG-Net), to which JCGR was integrated in 2012. However, JCGR’s attitude towards corporate governance has not changed at all. In order to show the philosophy of JCGR’s corporate governance survey (JCGIndex Survey), its purpose stated in the wish letter at the time of the first survey (2002) is given below (corrected slightly).

From now on, JCGR will call 16 surveys from 2002 to 2017 as the first phase survey and the survey after 2019 as the second phase survey.

About the disclosure of JCGIndex of individual companies

Under globalization, corporate governance is becoming one of the key criteria for corporate evaluation. Investors, as well as all stakeholders in the company, are interested in corporate governance. In that sense, we expect all companies to answer and that we can publish the index. We also ask that you approve the publication of your JCGIndex.

JCGR hopes that all respondents willingly accept the announcement, but JCGIndex for companies that do not receive approval will keep it confidential. However, we will announce the names of all the companies that responded. Also, for the top half companies with large JCGIndex figures among all responding companies, the company name and JCGIndex will be announced as the top group. Please confirm the approval in the form attached to the answer sheet.

In any case, we will report the JCG Index of each company to the companies that you have answered, so please use it inside and outside the company. However, when publishing, please specify that it is the JCG Index of the Japan Institute of Corporate Governance (JCGR). As JCGR, we analyze the JCGIndex of each company statistically and announce the “overall picture” of the responding company.

If you would like to know the details of a particular company’s response and the JCG Index, please request written consent from the company that allows us to provide the information. We offer it under certain conditions such as confidentiality.

Financial supporter for the JCGIndex survey

Ross School of Business Mitsui Life Financial Research Center since 2008.

Please cooperate with the Corporate Governance Survey

March 25, 2002

In recent years, the word “corporate governance” has come to fly frequently over the country. With the title, the board of directors’ reform, the introduction of the executive officer system, and the exercise of voting rights by institutional investors have been discussed about their practice. The Commercial Code will be revised, with emphasis on reform of corporate governance.

Under these circumstances, in order for Japanese companies to rebuild their competitiveness under globalization and to regenerate the Japanese economy from the economic downturn which lasted more than ten years, common recognition was prevailing and shared among Japanese that a revolution of corporate governance is inevitable in Japan.

However, corporate governance has views from various angles, and it does not seem to have been discussed based on common definition and recognition necessarily. Even the idea is not shared that corporate governance is from the viewpoint of controlling the manner of corporate management of a public company. When we observe companies, we find their efforts towards corporate governance, and its practical situation is quite different by companies. These facts symbolize a lack of common understanding of corporate governance. The revised Commercial Law introduced a new type of board of directors with three committees but eventually left a conventional board type with corporate auditors.

Based on this reality, JCGR decided to survey the state of corporate governance of individual Japanese companies and to transform to index. For the time being, JCGR’s targets are all listed companies on the First Section of the Tokyo Stock Exchange Stock Market. With the Revised Corporate Governance Principles published by the Japan Corporate Governance Forum in October 2001 as one model, JCGR measures whether each company’s corporate governance is close to or far from this model and converts the distance into JCGIndex.

To that end, JCGR sends a questionnaire by post to each company and asks the company to answer to that questionnaire. In addition, we may interview the companies as necessary. JCGR expects that as many companies as possible respond to the questionnaire.

JCGR’s aim is to understand the current state of corporate governance of Japanese companies that have been drawing attention internationally. JCGR believes that people in Japan can look back on Japanese companies from a new angle thanks to JCGR’s revealing the overall picture of corporate governance of Japanese companies. Furthermore, JCGR hopes that overseas business community’s understanding of Japan will deepen further. At the same time, through the process of responding to this questionnaire, JCGR hopes that each company will deepen understanding and recognition of the new corporate governance.

All responses returned from each company, and JCGIndex measured based on them will be confidential. However, JCGR will only disclose the name of the companies that respond.

JCGR will report the company’s own JCGIndex to each company that responded. It is free that the company uses its JCGIndex, but, when using, please specify that it is an index by the Japan Corporate Governance Research Institute (JCGR). On the other hand, JCGR statistically processes JCGIndex of each company and announce the overall picture of the respondent companies.

There are global commonalities in corporate governance principles, but at the same time, there is uniqueness reflecting the culture and society of each country. Upon creating JCGR’s questionnaire, JCGR made the utmost effort to devise ingenuity so as to highlight the difference between Japan and the other countries especially. In JCGR’s questionnaire, a wide range of items related to corporate governance are covered, and items which seemingly do not seem to be related to governance are included, but they have a certain meaning from JCGR’s standpoint. We appreciate that companies answer to JCGR’s questionnaire with understanding JCGR’s standpoint.

The questionnaire consists of seven parts, and the first two Parts are prepared to assume that the CEOs answer to the questions by themselves. JCGR thinks that it is difficult for too busy CEOs to respond, but JCGR hopes that CEOs do themselves.

For each question, please answer based on each company’s situation as of April 1, 2002; and please post by May 31 (Friday). The schedule thereafter is shown on the next page. We appreciate your understanding and cooperation, and sincerely thank you for your continued support in the future.

JCGIndex Survey Group

Takaaki Wakasugi (Professor at the University of Tokyo, Director, Mitsui Life Financial Research Center, University of Michigan)
Christina Ahmaijan (Associate Professor, Graduate School of International Corporate Strategy, Hitotsubashi University)
Ariyoshi Okumura (Director, International Corporate Governance Network)
Kazuo Fukui (Director, Fujitsu Research Institute)
(Affiliations are at the time)