Japan firms see English disclosure requirement as a burden, poll shows

By Thomson Reuters Apr 17, 2024 | 6:04 PM

By Daniel Leussink

TOKYO (Reuters) – Almost all Japanese companies in a Reuters monthly corporate poll see the Tokyo Stock Exchange’s planned requirement to have top-tier firms disclose key financial statements in English as a burden.

Most firms are still considering whether to take steps, such as boosting shareholder returns, in response to a TSE capital efficiency improvement drive, the poll also showed on Thursday, highlighting pressure on listed firms amid growing scrutiny.

Japan Exchange Group’s TSE has been promoting improved corporate governance to help listed firms become more attractive for both domestic and foreign investors, including by launching its Prime market in April 2022.

Other measures include a March 2023 call for the disclosure of long-term plans to improve capital efficiency, especially if a firm’s shares are trading below book value.

In Reuters’ April survey, as many as 91% of respondents said it was a burden to make disclosure in English.

Just over half of respondents said they plan to have a system in place to make disclosure in both Japanese and English by April 2025, when bilingual disclosure becomes a requirement for some 1,600 firms on the Prime market.

Over a quarter of respondents said meeting such a requirement by that time would be difficult, while just under a fifth said they already had a system.

The poll showed that 53% of respondents were still considering measures in response to the capital efficiency drive, while 23% said they had fully responded and another 22% were unlisted. The proportion not considering a response was 3%.

Regarding such measures, just over half of firms said they would boost investor relation activity or invest for growth over the next six months, the poll showed.

Another 48% were looking to boost shareholder returns, while about a quarter of respondents said they would restructure their business portfolio.

The latest poll also showed 87% of firms were experiencing or expecting an impact from new annual overtime limits for truck drivers that came into effect on April 1.

The government has limited truck drivers’ annual overtime to 960 hours to improve working conditions and make the work more attractive.

Nearly two-thirds of respondents were looking at collaborating with transportation companies to respond to the issue, while 57% would review delivery routes and schedules and another 47% plan to pass on costs through raising prices.

The survey was conducted for Reuters by Nikkei Research on April 3-12, with firms responding on condition of anonymity to allow them to speak more freely.

A total of 400 firms were polled, with the number of responses varying from 164 to 228, depending on question.

(Reporting by Daniel Leussink; Additional reporting by Kiyoshi Takenaka; Editing by Christopher Cushing)