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Create a new era through in-depth dialogue

2022.03.25

Yoshiko Sato

Yoshiko Sato

Executive Managing Director, Japan Investor Relations Association (JIRA)

Create a new era through in-depth dialogue
Yoshiko Sato

Yoshiko Sato

Executive Managing Director, Japan Investor Relations Association (JIRA)

Due to the pandemic and geopolitical risks, the business environment has been significantly changing. In such a time of change, it is important to conduct investor relations (IR) activities to disclose information and have discussion from a mid- to long-term perspective. In fact, the number of companies which applied for the “IR Award” selected by the Japan Investor Relations Association (JIRA) has increased to almost 300 companies, and companies which demonstrate early recognition of and response to potential risks receive a high evaluation. Furthermore, 148 companies (as of February 2022) applied for our “IR Counselling” after the evaluation, and active discussions have been frequently held.

In order to increase the number of attractive companies, which is one of the objectives of introducing the new market segments, merely increasing the frequency of IR activities and improving the formality of corporate governance are not sufficient. It is essential to enhance opportunities for dialogue between companies and investors, with which both parties feel fulfilled.

Companies have been making efforts since the introduction the Corporate Governance Code and in response to its revisions. However, the way to an ideal state varies from company to company. Without appropriate disclosures taking into account of the investors’ viewpoint, I’m afraid that the door to the above-mentioned dialogue will not open. Moreover, the scope of IR communications is broadening to cover both financial and non-financial information, including sustainable increase in corporate value and contribution to the society among others. Companies are expected to work on this matter by ensuring that the entire corporate groups are convinced of its importance, and to clearly express their intention together with the top management.

The same would apply to investors. How many investors do companies really want to have dialogue with? It is said that recently the percentage of active investment management has been declining, but one of the capital market’s roles would be the visualization of the intrinsic value of a company. Investors who can not only analyze existing businesses, but also assess the ability of companies to create value in the future, are invaluable to the market as well. Companies reducing investors’ concerns through disclosures, and investors raising awareness among top management from a broader perspective – such dialogue is anticipated in the new market.

Furthermore, if companies receive positive evaluations and support with regard to issues discussed during the dialogue, it will enhance the motivation and effectiveness of concerned parties. For example, there is a company that incorporated the reform of its personnel system into its management strategy based on “purposes” and “vision” and makes an achievement through appropriate evaluation. As for investors, I feel there is a progress in nurturing human resources who have an in-depth understanding of environmental and social issues as well as in developing investment management methods. To ensure the “investment chain” works well, the existence of supporter(s) of the above-mentioned trends is absolutely necessary.

Perception of values is diverse among companies, investors, and stakeholders. Precisely because of that, I believe companies can multiply their abilities through dialogue. Our Association is determined to continue its efforts for deepening dialogue based on disclosed information, increasing corporate value and realizing a sustainable society.

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