Follow-up of Market Restructuring

On March 31, 2023, Tokyo Stock Exchange (TSE) requested that all listed companies on the Prime and Standard Markets take "action to implement management that is conscious of cost of capital and stock price."

Action to Implement Management that is Conscious of Cost of Capital and Stock Price (published on March 31, 2023) icon-pdf

List of Companies That Have Disclosed Information

In consideration of the high interest shown by domestic and foreign shareholders and investors in companies' response to the reques, TSE has begun publishing a list of companies that have disclosed information in accordance with the request to inform investors of who is taking action, thereby encouraging companies to make a proactive effort.

List of Companies That Have Disclosed Information Regarding "Action to Implement Management That Is Conscious of Cost of Capital and Stock Price" (as of the end of January 2024) icon-xls
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  • ・The past list is available on the sheet "Ref. List (MM DD, YYYY)" in the Excel file above.

Scope of Companies on the List

In this list, for listed companies in the Prime and Standard Markets, disclosure status is determined as follows based on keywords described in the company's most recently submitted Corporate Governance Report as of the time when the data was collected (as of the end of December 2023 in this time.)
- If the keyword "Action to Implement Management That Is Conscious of Cost of Capital and Stock Price" is found, the status is listed as "disclosed."
- If the keyword, "Action to Implement Management That Is Conscious of Cost of Capital and Stock Price (Under Consideration)" is found, the status is listed as "under consideration."

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  • ・If none of the keywords are found, the company is not listed.
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  • ・In cases where a company discloses the information in accordance with the request in English, and its corporate governance report includes the keyword "Disclosed in English" along with one of the above keywords, the "English disclosure" column on the List of Companies sheet shall be set to "available".

Key Points and Examples Considering The Investor’s Point of View

In light of the expectations from many shareholders and investors in Japan and overseas for further progress in companies' initiatives, on February 1, 2024, TSE has compiled and published the following report for listed companies in order to provide listed companies with reference material. This report is based on interviews with many investors in Japan and overseas (a total of over 90 investors, approximately 30% domestic and 70% overseas, consisting mainly of active funds and other investors that focus on medium- to long-term corporate value enhancement), including a summary of the key points of initiatives that investors expect from companies, and also examples of initiatives that investors deemed as fulfilling these expectations.

Key Points and Examples Considering The Investor’s Point of View in Regard to Management Conscious of Cost of Capital and Stock Price (published on February 1, 2024) icon-pdf
[Appendix] Case Studies (published on February 1, 2024) icon-pdf

Purpose of Action

  • From the viewpoint of implementing management that is conscious of cost of capital and stock price, TSE requests that listed companies conduct a series of actions on an ongoing basis. This starts with gaining a proper understanding of their cost of capital and profitability based on the balance sheet, and continues with analyzing and assessing the current situation around these and the market valuation at board meetings, preparing and disclosing plans for improvement, and then using dialogue with investors to update them on the progress of these efforts. Note: This request targets all listed companies on the Prime and Standard Markets.
  • Through conducting these actions, it is expected that, based on the basic management policy established by the Board of Directors, the management team will take the lead in appropriately allocating resources with sufficient consideration of cost of capital and profitability. This could be by pushing forward initiatives such as investment in R&D and human capital that leads to the creation of intellectual property and intangible assets that contribute to sustainable growth, investment in equipment and facilities, and business portfolio restructuring.
  • While share buybacks and dividend increases are considered effective means of improving profitability, if shown as such by the company's analysis of whether the balance sheet effectively contributes to value creation, TSE is not necessarily expecting companies to use only these or solve issues with a one-off response. Efforts are expected on a fundamental level to attain profitability in excess of cost of capital on a sustained basis and achieve sustainable growth.
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  • ・Since analysis and discussion of the current situation must be carried out sufficiently before planning and disclosure can begin, TSE is not specifying a timeframe for the start date of disclosure, but requests as prompt a response as possible.

Follow-up on Request

  • Status of Companies' Responses as of July 2023
Document 3 of the Eleventh Council of Experts Concerning the Follow-up of Market Restructuringon on August 29, 2023 icon-pdf
  • TSE's Future Initiatives as of October 2023
Document 2 of the Twelfth Council of Experts Concerning the Follow-up of Market Restructuringon on October 11, 2023 icon-pdf
  • Publication of a List of Companies That Have Disclosed and Notes on the Request notified to listed companies on October 26, 2023
TSE to Publish a List of Companies That Have Disclosed Information Regarding "Action to Implement Management That Is Conscious of Cost of Capital and Stock Price" (notified to listed companies on October 26, 2023) icon-pdf
  • Status of Companies' Responses as of the end of December 2023
Status of Disclosure on "Action to Implement Management that is Conscious of Cost of Capital and Stock Price" (published on January 15, 2024) icon-pdf
Details of Disclosure Status (published on January 15, 2024) icon-pdf