Japan's financial watchdog has begun discussions as part of a review of compulsory quarterly company disclosures, a controversial move the regulator argues will encourage firms to think long-term but that critics say will erode transparency.
The Financial Services Agency is expected to show as early as this spring the direction of its review, a part of efforts to promote a "new capitalism" as advocated by Prime Minister Fumio Kishida, following discussions at its Financial System Council.
The move comes as the agency tries to address so-called "short-termism" in which companies prioritize market-pleasing profit figures at the expense of investing in sustainable growth and delivering the wage hikes desired by the government.
At the council's first meeting on the issue on Feb. 18, the proposal was opposed by multiple corporate governance experts who argued reducing the frequency of disclosures will impact transparency and increase uncertainty around listed Japanese companies.
Many also expressed doubts about the claim that removing compulsory quarterly disclosure will address the issue of short-termism, saying that there is not enough academic evidence to back it.
Many did, though, support the need to remove the current duplication that exists in compulsory results disclosures.
The quarterly disclosure rule was introduced by the Tokyo Stock Exchange in 1999 and became mandatory by law in 2008 after investigators were hamstrung in their work looking into internet firm Livedoor Co.'s falsification of quarterly results in 2006.
Currently, listed companies disclose results every three months based on stock exchange rules as well as being required to provide audited quarterly financial statements, but there is overlap in the content of the market announcements.
There have been some attempts to review quarterly disclosure rules in the past, but a 2018 study ended without adopting any change, with the FSA panel saying the review "could affect Japan's competitiveness as it could be perceived as a retrograde step."
According to the FSA, Britain and France removed compulsory quarterly disclosures in 2014 and 2015, respectively.
Related coverage:
Toyota logs record April-Dec net profit, backed by weaker yen
Softbank Group gives up deal to sell U.K. chip firm over regulatory issues
Sony lifts FY 2021 operating profit outlook to record 1.2 tril. yen
