South Korean financial regulators adopt Japanese model to increase stockholder gains
(MENAFN) Financial regulators in South Korea are taking cues from Japan's successful efforts to enhance shareholder returns, as they unveil measures aimed at replicating Japan's experience in increasing stock valuations through corporate governance reforms. This move comes on the heels of recent revelations by South Korean officials regarding measures designed to bolster shareholder returns, aligning with Seoul's aspirations to emulate Japan's achievements in this domain.
The Japanese Nikkei 225 index recently reached its highest levels in over three decades, marking a significant milestone after years of reform efforts aimed at boosting stock market performance. One key aspect of Japan's reform strategy was the implementation of a "defamation" system by the Tokyo Stock Exchange, incentivizing companies to prioritize strategies aimed at enhancing their value and capital efficiency.
Taking inspiration from Japan's reform trajectory, South Korea has introduced a series of proposals aimed at driving similar outcomes. Among these proposals is the launch of the "Korea Value Up" index, designed to showcase companies that have excelled in improving their capital efficiency. Additionally, South Korea plans to introduce tax incentives to encourage companies to prioritize shareholder returns, mirroring similar initiatives in Japan.
Kim Soo-young, Vice Chairman of the South Korean Financial Services Commission, emphasized the government's commitment to offering stronger incentives to encourage participation from Korean companies. Drawing parallels with Japan's "JPX Prime 150" index, which has seen approximately 20% of Japanese companies joining the government program to enhance evaluations, Kim highlighted South Korea's intention to provide even more robust incentives to attract greater participation from local businesses.
In essence, South Korea's embrace of the Japanese model reflects a strategic shift towards prioritizing corporate governance reforms aimed at bolstering shareholder returns and enhancing overall market performance. By leveraging lessons learned from Japan's successful reforms, South Korea aims to foster a conducive environment for sustainable growth and value creation within its corporate sector.
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