The State of Corporate Japan in Numbers

Feb. 4, 2016

With corporate governance and return on capital in the spotlight in Japan, companies are increasingly examining how they manage their capital base.

BCCJ Corporate Plus member, PwC, has published a study on the recent operating, value and capital market performance of the non-financial constituents of the JPX-Nikkei Index 400 targeted at senior executives tasked with dealing with critical business issues. 

The study examines the recent performance of large Japanese companies in the context of changes that have occurred since the inception of Abenomics, including macro economic changes and a greater focus on governance and return on capital.

Throughout the study, PwC focuses on return on capital, the drivers of such return (operating margin and capital efficiency) and the impact of different levels of return on value creation and capital market performance.

The analysis included in the study, while primarily undertaken at the market or sector level, is punctuated by key questions that senior executives might consider as they juggle with the sometimes competing demands of different stakeholders in their company:

  • Is my company sufficiently focused on the balance sheet and the efficient use of capital, or is top-line/bottomline growth the primary objective of senior executives and division heads?
  • Do I have the right information, both qualitative and quantitative, to make informed decisions on how to allocate capital across our portfolio of businesses?
  • Does the mix of businesses operated by my company align with our capabilities?
  • In what areas do we have a competitive advantage?
  • Could a different owner generate higher returns from an underperforming business in our portfolio?
  • Do we have a disciplined approach to identifying divestment targets and executing divestments?

PwC advises companies to routinely undertake such analysis at a corporate level and, for the most revealing insights, at a more granular business segment level.

"PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, tax and advisory services."

For more insights, read the full report HERE.


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