In this fourth interview about corporate governance reform in Japan, IJ spoke with Yoshiko Takayama, Managing Director of J-Eurus IR Co., Ltd. and a member of the Council of Experts Concerning the Follow-up of Japan's Stewardship Code and Japan's Corporate Governance Code. Based on her experience reforming investor communication and corporate governance practices at listed companies, she identified board evaluations as the next advancement for Japanese businesses.

Japan (IJ):

You are an investor relations expert and a member of the Council of Experts Concerning the Follow-up of the Codes. What is your evaluation of Japan's governance reform efforts to date?


Our company, established in 2000 as a consulting company of investor relations and corporate governance, has closely watched the changes in corporate governance among Japan's major corporations since then. As you know, the idea of a corporate governance code was intensely discussed in 2014 and the first version of the code was implemented in 2015. Looking back, I'd say Japanese companies have come a long way, especially with regard to the role and responsibilities of the board of directors.

Just before the code was applied, most Japanese boards were so-called management boards, not monitoring boards, and most directors were CEOs and their loyal lieutenants. Now, however, a lot of listed companies have more than two outside directors, many of whom are independent of the company.

Japanese companies have also developed a better understanding of the role and responsibilities of a proper board of directors. Today many corporate boards try to enhance their oversight function to decide on important policies. Board meetings at companies now generally take more time and involve more meaningful discussions.


We imagine the changes have affected your work as an adviser. What has that been like?


The corporate governance code has had an impact on dialogue between investors and companies, and the services our firms provides. Before the code, such communication simply meant reporting financial information. A year prior to enactment of the governance code, however, the Financial Services Agency established the stewardship code for institutional investors. Domestic asset managers, well aware of developments in Europe and the US, quickly learned to give closer consideration to non-financial factors, including ESG (environmental, social and governance), in addition to financial figures from a mid- and long- term view. The governance code has made top management at listed companies more aware of best practice models for good governance.

Now people involved in corporate governance and IR, including corporate directors, executives and stewards at asset managers are working to find their own best practices for communicating. In a sense, we have been observing a convergence of IR and corporate governance.

Consequently, consulting firms in Japan, including ours, have been providing a wider range of services, such as helping companies devise customized frameworks for ESG their activities.


From your perspective, what is the next big challenge for governance reform?


I think the next big challenge will be to make the board of directors more effective. As I said earlier, companies have been changing the structure and function of their boards, but so far, I have observed in many cases those changes have been procedural rather than substantive. Board members are struggling to create truly effective boards.

To my mind, one key tool to achieving that end is the board evaluation, which is a concept written into the governance code*. To provide services specializing in board evaluations, J-Eurus IR set up a separate company named Japan Board Review Co., Ltd. in 2015.


Give us a few more details please.


An effective board needs to have its own core policies, comprising the roles and responsibilities agreed on by the board. With that core, the board can properly evaluate its own performance. Many Japanese companies seem to be in the middle of establishing such basic governance policies. The evaluation is not a compliance exercise required by the governance code. It is a great opportunity for companies to create their own cores and improve board effectiveness. With this in mind, we provide third-party evaluation of the board, which consists of a deep analysis, including interviews with each director.


Thank you very much.

*The Corporate Governance Code: Principle 4.11 Preconditions for Board and Kansayaku Board Effectiveness

The board should be well balanced in knowledge, experience and skills in order to fulfill its roles and responsibilities, and it should be constituted in a manner to achieve both diversity, including gender and international experience, and appropriate size. In addition, persons with appropriate experience and skills as well as necessary knowledge of finance, accounting, and the law should be appointed as kansayaku. In particular, at least one person who has sufficient expertise on finance and accounting should be appointed as kansayaku. The board should endeavor to improve its function by analyzing and evaluating the effectiveness of the board as a whole.

4.11.3 Each year the board should analyze and evaluate its effectiveness as a whole, taking into consideration the relevant matters, including the self-evaluations of each director. A summary of the results should be disclosed.

About J-Eurus IR:

Yoshiko Takayama
Yoshiko Takayama

Managing Director, J-Eurus IR Co., Ltd. / President, Japan Board Review Co., Ltd.

Yoshiko Takayama is Managing Director of J-Eurus IR Co., Ltd., which she co-founded in 2000. At J-Eurus IR, Yoshiko has been engaged in investor relations and corporate governance consulting for Japanese companies. Since 2015, she has served as President of Japan Board Review Co., Ltd., where she has given advice on the effectiveness of Japanese boards and conducted board evaluations.

Yoshiko has been an active member of international and domestic corporate governance associations. She has been a member of International Corporate Governance Network (ICGN) since 2003 and served on ICGN Board of Governors from 2010 to 2015. She has also served on the Board of Japan Corporate Governance Network since 2010.

Yoshiko is a member of the Council of Experts Concerning the Follow-up of Japan’s Stewardship Code and Japan’s Corporate Governance Code (FSA and Tokyo Stock Exchange). She is also a member of the Asset Management Policy Study Group of the Pension Fund Association for Local Government Officials, the second largest public pension fund in Japan.

Yoshiko received her BA in Economics from the University of Tokyo, her MBA from Yale School of Management, and her PhD in Socio-Information and Communication Studies from the University of Tokyo.