Newspaper article International New York Times

Investors Gear Up for a Marathon Day of Shareholder Meetings in Japan

Newspaper article International New York Times

Investors Gear Up for a Marathon Day of Shareholder Meetings in Japan

Article excerpt

This year, more than one in three companies traded on the Tokyo Stock Exchange will hold their annual meetings on Friday.

Investors who own shares in Japanese companies might want to clear their calendars next Friday.

At 10 a.m. on June 27, annual shareholders' meetings kick off at more than 900 major companies across Japan. That is more than one in three companies traded on the Tokyo Stock Exchange.

The herding behavior has long been practiced by Japanese companies to make sure that as few pesky investors as possible -- not to mention news reporters -- turn up at their meetings.

Companies originally justified the practice as a protection against professional racketeers who sought to extort money from companies with the threat of disrupting the shareholders' meetings. But the racketeers no longer pose much of a threat, and experts say the lingering practice underscores a dismissive attitude among Japanese companies toward shareholders.

Usually poorly attended, shareholder meetings in Japan tend to be choreographed affairs, with the voting dominated by an insiders' club of lenders, suppliers and customers.

Those tepid meetings are just one of a bevy of unfriendly arrangements investors face in Japan, including a lack of independent directors, "poison pills" that can dilute shareholders' stakes, and a general lack of regard for corporate governance, all of which have played a role in the chronically low returns on equity at Japanese companies.

The average return on equity at listed Japanese companies, excluding those in the financial sector, hovers at around 5 percent, compared with more than 15 percent at listed companies in the United States, according to the Life Insurance Association of Japan. …

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