By Takahiko Wada

TOKYO, Reuters – Japan’s Prime Minister Fumio Kirishida is seeking to reduce quarterly disclosure obligations for companies in his campaign to build a “new capitalism”. However, it could take many years to implement his promises.

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

Kishida’s ability and willingness to implement policies to reduce inequality in wealth distribution and to close the wage gap would be further questioned by delays to plans to comply with disclosure requirements.

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.

Some lawmakers from the ruling party have called to relax this rule. They argue that quarterly disclosures make it difficult for companies not to be too focused on short-term gain.

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, employees and partners.

He said, “We have to make the environment conducive to this,” and suggested that quarterly disclosure rules should be reviewed. In return, firms must increase their disclosure of nonfinancial financial information.

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

Officials with direct knowledge say that discussion on a panel overseen and controlled by the Financial Services Agency will only begin next year.

One official said that it was an issue they would discuss through the next year.

Officials stated that the earliest government could submit legislation to Parliament will be in 2023. New rules can be implemented by 2024.

FSA replied that they have not yet decided when this topic would be addressed at the panel.

It is not clear whether or not the FSA will listen to Kishida’s appeals. Investors would benefit from mandatory quarterly disclosures. The FSA reviewed this possibility back in 2018.

A FSA official said that it was necessary to provide solid reasons for changing what’s currently mandatory into voluntary regulations.

The private sector’s reaction is mixed.

Yoshihiko Kawmura is Hitachi’s chief financial officer (OTC:) and welcomed Kishida’s suggestion, given the burden of producing quarterly documents.

“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 Suzuka, an analyst at Daiwa Institute of Research says it is unclear how Kishida would benefit from a review of quarterly disclosure.

He said, “If there is insufficient timely information disclosure, it could raise uncertainty about corporate management and cause risk-averse investors not to invest, which can make it more difficult for companies raising funds.”

It could send the wrong message to foreign investors who might think Japan is not open about disclosure of information.