Takahiro Miyao's Radio Institute of Global Communications: No. 18, April 3, 2005

Takahiro MIYAO (Professor, GLOCOM)

Partial transcript and translation from Prof. Miyao's Radio Program, posted here with permission of Radio Nikkei

Takahiro Miyao's Radio Institute of Global Communications: No. 18
Radio Nikkei daiichi hoso ; BS Radio Nikkei 300 ch.
Broadcast time:	April 3 (Sunday) 19:00-19:30
Recording place:	Recorded in Radio Nikkei's Studio
Program:	1. Introduction 2. Virtual Discussion 3. Trend Research 4. Concluding Remarks
Audio:	Radio Program  (Windows Media Player) (Mainly in Japanese but some parts in English) Asia Station Web site (in Japanese)

Introduction

Hello, everyone. Spring has come finally, and I hope you enjoyed viewing cherry blossoms. Today I will take up an important issue "who is the owner of a company," which is being asked frequently in connection with M & A surrounding a big mass media company in Japan. And then we will have a special guest, Mr. Keikichi Honda, notable economist, in our telephone interview to talk about the Japanese economy as well as the US and Chinese economies. It should be quite interesting and exciting, so please stay turned.

Virtual Discussion

Today we will take up an important article "Who is the owner of a company: maximization of shareholder value is the goal," written by Tokyo Keizai University Professor Takaaki WAKASUGI. According to Professor Wakasugi, in a capitalistic economy with private property ownership, a company is a private property with an owner, that is its shareholders. But this reference to the "owner" of a company is not a legal claim but a description from an economic perspective. In a stock company, shareholders - as a corollary of ownership - exercise governance over the company, which in turn burdens them with corporate risk. Under normal circumstances, only the shareholders bear various risks of running a business by a company among its stakeholders. When a company develops a new product and starts a new business, and when in fact the profit materializes, shareholders can enjoy higher share prices. This is what is meant by shareholder value creation. M&A is a means to transfer governance to new shareholders that could provide for an opportunity to transform inefficient companies into productive ones or enable sagging companies to bring forth new profitable business. It contributes to value creation and increases the efficiency of the economy of the state. M&As are becoming active in Japan, but it is necessary for people to realize the importance of shareholder governance, which has been neglected in the past.

This is Mr. Wakasugi's explanation about ownership, governance, and M&A, but a question remains whether this kind of standard interpretation can take roots in Japan, where employees are important stakeholders, possibly as important as stockholders, as employees at Radio Nippon and Fuji TV are openly opposed to a possible takeover of their company by Livedoor. We may need to take account of not only ownership and governance, but also employees as stakeholders and their motivation to work for their company.

Trend Research

Today, we will have a telephone interview with Mr. Keikichi Honda, who is the chairman of NCR Japan and a notable economist himself, so we will ask him about the Japanese economy and also the US and Chinese economic conditions.

(Interview with Mr. Honda in Japanese)

Concluding Remarks:

If you have any comment on today's program, please contact us through our Radio Nikkei hompage (www.radionikkei.jp/joho). Actually you can hear our past broadcast program on our homepage by clicking the "on-demand" section in the upper righthand corner. I hope you enjoyed today's program. Our next program will be on the first Sunday in May, that is, May 1. In the meantime, please take care. See you next month.