How to finish Japan’s business revolution
- Governance reforms in Japan began in 2012 under Shinzo Abe, leading to improved shareholder relations.
- These changes have fostered confidence in Japan's previously stagnant economy.
- However, the transition to a fully shareholder-friendly model is still a work in progress.
In recent years, Tokyo-listed companies have made significant strides in becoming more shareholder-friendly, a shift that began with governance reforms initiated after Shinzo Abe took office in 2012. These reforms aimed to dismantle outdated practices that had long hindered corporate value in Japan, leading to a renewed sense of confidence in the nation's economy, which had previously been stagnant. Despite these advancements, the journey towards fully embracing shareholder capitalism remains incomplete. Companies worldwide have faced pressures to address social, environmental, and national-security issues, often imposed by governments, which complicates their primary profit-making objectives. This dual focus presents a challenge for corporate Japan as it navigates the balance between shareholder interests and broader societal responsibilities. The ongoing evolution of corporate governance in Japan is crucial for sustaining economic growth and ensuring that companies remain competitive in a global market increasingly focused on accountability and transparency.