NRI Papers
No.111 November, 2006
  Options Available for Japanese Companies in a Globalized Market Environment  
Yujiro TAKI, Jun NISHINO, Yasushi KONUMA
   In recent years, Japanese companies have been facing growing changes in their business environments. In their efforts to meet these changes, Japanese companies can broadly be divided into two groups. One group of companies aims to achieve greater corporate value through firmly establishing and augmenting their core businesses; the other group does not. Among companies striving to raise their corporate value, many are making full use of not only their internal management resources but also outside resources.
   While the Japanese institutional environment is also undergoing major changes, an increasing number of shareholders started to intervene in business management with their deep understanding of "corporate value" and "shareholder value." To successfully deal with such an environment, Japanese companies must show strategies to the market that set forth measures to maximize corporate value in a rapid manner and that can convince the market, and must actually implement such strategies.
   Delays in enhancing corporate value as seen in some companies are attributable to the poor recognition of their management executives regarding corporate value, which widens gaps between these companies and the capital market. These companies tend to adopt measures to attract stable shareholders and to prevent hostile takeovers. Because the market does not endorse such measures, their corporate value is lowered even further, falling into a vicious circle.
   At the same time, some companies are skillfully utilizing outside management resources and M&A (merger and acquisition) schemes to further augment their corporate value. Nevertheless, there is a growing difference in market capitalization between even such companies and the world's top-ranked companies.
   There are also companies that consider it difficult to achieve growth from mid- and long-term perspectives while keeping their shares listed on the stock exchange. After reconsidering the importance of listing, these companies have decided to delist their shares and have been pursuing the enhancement of their corporate value outside the market.
   Becoming a winner in the global market is predicated on how quickly corporate value can be enhanced. If a company finds it difficult to pursue the improvement of corporate value while continuing to list their shares, one realistic option is to build corporate value outside the market.

I Changing Corporate Governance Environment and Widening Gaps between Companies
II Active Shareholders Having Major Impact on Corporate Governance
III Factors behind the Increase of Companies Pursuing Conservative Growth and Their Conduct
IV Behavioral Principles of Companies Pursuing Aggressive Growth Strategies
V Companies Opted to Leave the Market in Pursuit of Growth
VI Future Direction of Corporate Behavior


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