{"id":4945,"date":"2025-07-04T16:20:56","date_gmt":"2025-07-04T08:20:56","guid":{"rendered":"https:\/\/www.hibiki-path-advisors.com\/?p=4945"},"modified":"2025-07-04T16:20:56","modified_gmt":"2025-07-04T08:20:56","slug":"post-4945","status":"publish","type":"post","link":"https:\/\/www.hibiki-path-advisors.com\/en\/message\/2025\/post-4945\/","title":{"rendered":"4\/Jul\/2025 \uff0d Public document disclosed by the FSA"},"content":{"rendered":"

Hello, this is Yuya Shimizu. I\u2019d like to share a few thoughts on the \u201cAction Programme for Corporate Governance Reform 2025<\/a>\u201d, released by the Financial Services Agency (FSA). One section in particular\u2014Part II-1-ii\u2014stood out to me as a meaningful step forward.<\/p>\n

\"\"<\/a><\/p>\n

While the English-translated version describes the issue slightly vaguely, the <\/u>Japanese version<\/a> clearly frames it as a response to the \u201ccash hoarding\u201d problem seen in Japan<\/u>. By explicitly identifying this as a problem, the FSA, in its role as the markets\u2019 guardian, has intensified the pressure on management teams and boards who merely sit on cash without investing or returning capital \u2014 thereby continuing to erode ROE.<\/p>\n

Companies often justify their large cash holdings as \u2018preparation for future growth investments.\u2019 However, in reality, we frequently observe situations where investment is insufficient, balance sheets expand unnecessarily, and ROE deteriorates. Statements like \u201cWe need a lot of cash now for our future CAPEX or M&A!\u201d often ring hollow to shareholders. This is because good management should enable growth investment to be financed by debt from banks, and if the stock is appropriately valued, raising capital through equity issuance at market price should also be feasible. Investing in growth is not inherently problematic, so long as it delivers results, but hoarding excessive cash under the vague promise of future investment is a different matter altogether.<\/u><\/p>\n

Two of the Investees for which we recently submitted shareholder proposals \u2014 Japan Pure Chemical (\u201cJPC\u201d)<\/a> and Tomoe Corporation (\u201cTomoe\u201d)<\/a> \u2014 are prime examples of this issue. At JPC, approximately 86% of total assets are in cash and investment securities, with zero debt. Tomoe holds 40% of its total assets in cash and investment securities (with debt only amounting to roughly 15% its total liabilities and equity). Their projected quarterly ROEs on Shikiho Online are 4.81% and 3.36% respectively \u2014 both well below an acceptable standard. Management, in both cases, has long taken shelter not beneath the metaphorical \u2018shade of a great tree\u2019, but in the shade (i.e. the comfort and safety) of excessive cash reserves, failing to return sufficient value to employees, shareholders, and to the company\u2019s own future for continuous long periods.<\/p>\n

In pursuit of shareholders\u2019 common interests, we will continue to actively engage with our portfolio companies facing such issues. We also sincerely hope that the FSA continue to raise such important issues for the transformation of Japan\u2019s corporate management mindset and growth of national economic prosperity.<\/p>\n

\n

This post does not constitute a solicitation for an offer to acquire or recommend the purchase or sale of specific securities, or advice on investment, legal, tax, accounting, or any other matters.<\/p>\n

\n

<\/p>","protected":false},"excerpt":{"rendered":"\u7686\u69d8\u3053\u3093\u306b\u3061\u306f\u3001Hibiki\u306e\u6e05\u6c34\u3067\u3059\u3002\u4eca\u56de\u306f\u3001\u91d1\u878d\u5e81\u304c6\u670830\u65e5\u306b\u516c\u8868\u3057\u305f\u300c\u30b3\u30fc\u30dd\u30ec\u30fc\u30c8\u30ac\u30d0\u30ca\u30f3\u30b9\u6539\u9769\u306e\u5b9f\u8cea\u5316\u306b\u5411\u3051\u305f\u30a2\u30af\u30b7\u30e7\u30f3\u30fb\u30d7\u30ed\u30b0\u30e9\u30e02025\u300d\u306b\u3064\u3044\u3066\u3067\u3059\u3002\u3053\u306e\u4e2d\u3067\u3001\u79c1\u304c\u5927\u5909\u826f\u3044\u5909\u5316\u3060\u3068\u30d4\u30f3\u3068\u6765\u305f\u90e8\u5206\u304c\u4ee5\u4e0b\u3068\u306a\u308a\u307e\u3059\uff08\u672c\u8cc7\u6599\u2161-1-\u2461\uff09\u3002 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\u5c1a\u3001\u672c\u6295\u7a3f\u306f\u7279\u5b9a\u306e\u6709\u4fa1\u8a3c\u5238\u306e\u7533\u8fbc\u306e\u52e7\u8a98\u82e5\u3057\u304f\u306f\u58f2\u8cb7\u306e\u63a8\u5968\u307e\u305f\u306f\u6295\u8cc7\u3001\u6cd5\u52d9\u3001\u7a0e\u52d9\u3001\u4f1a\u8a08\u306a\u3069\u306e\u52a9\u8a00\u3092\u884c\u3046\u3082\u306e\u3067\u306f\u3042\u308a\u307e\u305b\u3093\u3002 Hello, this is Yuya Shimizu. I\u2019d like to share a few thoughts on the \u201cAction Programme for Corporate Governance Reform 2025\u201d, released by the Financial Services Agency (FSA). One section in particular\u2014Part II-1-ii\u2014stood out to me as a meaningful step forward. While the English-translated version describes the issue slightly vaguely, the Japanese version clearly frames it as a response to the \u201ccash hoarding\u201d problem seen in Japan. By explicitly identifying this as a problem, the FSA, in its role as the markets\u2019 guardian, has intensified the pressure on management teams and boards who merely sit on cash without investing or returning capital \u2014 thereby continuing to erode ROE. Companies often justify their large cash holdings as \u2018preparation for future growth investments.\u2019 However, in reality, we frequently observe situations where investment is insufficient, balance sheets expand unnecessarily, and ROE deteriorates. Statements like \u201cWe need a lot of cash now for our future CAPEX or M&A!\u201d often ring hollow to shareholders. This is because good management should enable growth investment to be financed by debt from banks, and if the stock is appropriately valued, raising capital through equity issuance at market price should also be feasible. Investing in growth is not inherently problematic, so long as it delivers results, but hoarding excessive cash under the vague promise of future investment is a different matter altogether. Two of the Investees for which we recently submitted shareholder proposals \u2014 Japan Pure Chemical (\u201cJPC\u201d) and Tomoe Corporation (\u201cTomoe\u201d) \u2014 are prime examples of this issue. At JPC, approximately 86% of total assets are in cash and investment securities, with zero debt. Tomoe holds 40% of its total assets in cash and investment securities (with debt only amounting to roughly 15% its total liabilities and equity). Their projected quarterly ROEs on Shikiho Online are 4.81% and 3.36% respectively \u2014 both well below an acceptable standard. Management, in both cases, has…","protected":false},"author":6,"featured_media":532,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[78],"tags":[],"class_list":{"0":"post-4945","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-78"},"views":6120,"_links":{"self":[{"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/posts\/4945","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/comments?post=4945"}],"version-history":[{"count":5,"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/posts\/4945\/revisions"}],"predecessor-version":[{"id":4955,"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/posts\/4945\/revisions\/4955"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/media\/532"}],"wp:attachment":[{"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/media?parent=4945"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/categories?post=4945"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hibiki-path-advisors.com\/en\/wp-json\/wp\/v2\/tags?post=4945"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}