Japan\u2019s financial regulator is urging the country\u2019s listed companies to spend more of their cash piles on long-term business investment instead of rewarding shareholders with buybacks and higher dividends.<\/p>\n
In addition to cash, executives should consider utilizing cross-shareholdings and real estate property for growth, Tatsufumi Shibata, a senior official at the Financial Services Agency, said in an interview. Japanese companies tend to prioritize payouts to shareholders regardless of where they stand in the growth curve, he said.<\/p>\n
\u201cI don\u2019t think investors demand that from companies that are in a rapid growth phase,\u201d he said in an interview.<\/p>\n
Shifting more of the country\u2019s wealth held by businesses and households to fund future expansion is one of the key pillars of Prime Minister Sanae Takaichi\u2019s efforts to revitalize the Japanese economy. She has long been critical of cash piles sitting on companies\u2019 balance sheets.<\/p>\n
Cash and deposits at roughly 1,215 Topix companies, excluding financial firms, increased 84% over the past decade to \u00a5130 trillion ($818 billion) as of the end of 2025, according to data. The most cash-rich industries are IT and services.<\/p>\n
The FSA is preparing its first revision in five years to the Corporate Governance Code, which has guided efforts to make listed companies more valuable. Japan\u2019s decade-old corporate governance reform has been credited with driving foreign investment by increasing firms\u2019 responsiveness to shareholders\u2019 demands.<\/p>\n
Shibata said the reform efforts have produced tangible results such as higher market capitalizations and more outside board directors. \u201cBut we cannot necessarily say companies are genuinely increasing their own medium- to long-term value,\u201d he said.<\/p>\n
The revised governance code, which had been available for public comments until earlier this month, has disappointed some investors, who had expected firms would be required to demonstrate effective use of cash. Companies are not explicitly required to do so.<\/p>\n
The governance code is designed to promote holistic dialogue between companies and institutional investors, Shibata said. Falling into narrow and formulaic discussion over companies\u2019 cash position is not the kind of action he hopes to see, he said.<\/p>\n
\u201cI think the revision is more challenging for those who think they should just follow the letter of the code,\u201d he said. \u201cThe hidden message is please think through very carefully.\u201d<\/p>\n
Institutional investors also have a role to play in getting companies to use cash for growth, according to Shibata. Last year, the regulator revised the Stewardship Code, a guideline for institutional investors, and it discloses a list of companies that have accepted it.<\/p>\n
\u201cIf there are those who do not engage in activities consistent with the code, one possible measure to consider is to remove them from the list of signatories,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"Japan\u2019s financial regulator is urging the country\u2019s listed companies to spend more of their cash piles on long-term…\n","protected":false},"author":2,"featured_media":40913,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[175],"tags":[217,215,3142,3061,359,214,216,190,29780],"class_list":["post-40912","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-business-of-japan","tag-corporate-governance","tag-fsa","tag-investments","tag-japans-business","tag-japanese-business","tag-japanese-economy","tag-tatsufumi-shibata"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/40912","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=40912"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/40912\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/40913"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=40912"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=40912"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=40912"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}