Abstract
Against the backdrop of a stock market rally after the return of the Liberal Democratic Party (LDP) to power in December 2012, governance reform is now on the political agenda again, notably a requirement to appoint outside directors to Japanese boards. As part of the LDP’s initiatives to improve shareholder engagement in Japan, Japan’s Financial Services Agency is expected to issue a Stewardship Code for investors, and the Tokyo Stock Exchange plans to create a new index factoring in governance, on top of financial metrics such as ROE.
