Japanese Voters Explicitly Expressed Their Opinion For Decision Making; How About Japanese Shareholders?

Monday, August 31, 2009 - Osaka, Japan

Taking the opportunity of the general election held yesterday, Japanese voters explicitly said “no” to the more than half a century of almost uninterrupted rule by the LDP (the Liberal Democratic Party). Their saying led to the DPJ (Democratic Party of Japan) winning over 300 seats in the 480-seat chamber in an election of almost 70% voting rate which is probably the highest in Japanese election history, opening the door to potential changes in Japan. Indeed, general election had long been mere façade but the years of unhealthy Japanese politics change voters’ minds and behaviours.

If Japan is considered as a publicly-quoted company, public opinion is equivalent to stock market, the general election is equivalent to shareholder meeting and Japanese voters to Japanese shareholders. Unless he/she is a top shareholder (usually financial institute), Japanese shareholders are usually quiet, rarely outspoken, and many shareholder meetings are mere façade, just like what the election had been. But with many companies suffering from poor performance, shareholders may change their mind to be outspoken similarly to voters of the election.

Excluding some exceptions, Japanese companies are in general under-valued in the stock market, and many are suffering from poor performance, not necessarily because of the worldwide economic crisis started last year. As some experts point out, the real reason for this may well lie in the fundamental issue of their management system and structure and/or business model that is no longer adapting to the business environment we live in today (e.g. dependent to export and/or high-end products thus likely to be affected by negative impact of world economy and currency trend, weak cost structure).

Taking all the above into account, it would not be a surprise that some Japanese shareholders start to become more outspoken and truly participate in decision making of the company they invest in. Responsibility of voters and shareholders is not only participation in the general election and shareholders meeting. The voters and shareholders are expected continuously to be attentive to and to check how their “company” is managed, together with its performance.