By Takahiko Wada

TOKYO, Reuters – Fumio Kishhida, the Japanese Prime Minister wants to relax quarterly reporting requirements for businesses as part of his promise to create a new capitalism. However implementation may take many years and complicate his outlook on one of his most important promises.

Kishida was only weeks in office, and he had to drop his promise to increase capital gains taxes to protect stock prices.

Kishida would face more difficulties if he fails to disclose requirements plans. This could cast doubt on his ability to pass policies that redistribute wealth, and reduce the wage gap.

Kishida may push for a revision of disclosure rules. Stock prices might fall. However, it is part of his mandate that he abandon policies only seeking short-term return,” Daiju Aoki said.

He must create a new type of capitalism, one that does not only look at the shareholders’ interests but also addresses social and environmental concerns.

Japan required quarterly disclosure in 2008 to align its regulations with those of the United States. This was done to increase Japan’s appeal to foreign investors and to improve Japan’s market position.

However, some lawmakers of the ruling party called for relaxation of this rule.

Kishida, who spoke to parliament Oct. 8, stated that corporations must look at business in the long-term and do so with benefits for not only shareholders but employees as well as business partners.

He stated that “we must encourage this,” such as reviewing the quarterly disclosure rules, and in return have companies increase disclosures of non-financial data.

The election is approaching, but Kishida’s Administration hasn’t made much progress toward launching this process.

According to government sources, the next year will not see any discussion at the Financial Services Agency panel that lays the foundation for the creation of legislation.

According to one official, “It is an issue that will be discussed throughout next year.”

For new regulations to take effect in 2024, officials stated on condition that they would not be able to disclose their identities because the rules were being developed without the approval of the parliament.

The FSA is unlikely to respond to Kishida’s requests. Investors would benefit from mandatory quarterly disclosures. The FSA reviewed this possibility back in 2018.

An FSA official stated that “we need very solid justifications to reverse what is now mandatory and make it voluntary.”

Reactions from the private sector remain mixed.

Yoshihiko Kumura (OTC) is Hitachi’s chief finance officer. He appreciated Kishida offering his help, especially considering the immense burden that comes with preparing quarterly reports.

“There are discussions within the company regarding how long it is possible to continue with quarterly disclosure,” said he.

Akira Kiyota (CEO of Japan Exchange Group) is prudent. He believes that timely disclosures are essential to accurately value stocks and ensure stock price.

Yutaka Suzuki is an analyst with Daiwa Institute of Research. He says that it’s not clear how reviewing quarterly disclosures would aid Kishida in achieving wealth redistribution.

He stated that if there’s not enough timely information, this could cause uncertainty to corporate management. This can prompt investors who are hesitant to take money out of stocks, making it harder for companies to raise capital.

This could also be a negative message for overseas investors. They may believe Japan is indifferent to information disclosure.