TOKYO, OCT. 19 -- In their zeal to conquer markets, Japanese corporations have traditionally paid scant attention to the concerns of stockholders. But today they received a message from the government: Start paying your shareholders higher dividends.
The message was delivered by Mitsuhiko Matsuno, director-general of the Finance Ministry's securities bureau, at a meeting of the Keidandren, the federation of major Japanese companies. According to a source who attended the meeting, Matsuno said: "It is important for companies to more fully consider the returns paid to investors."
Although Matsuno's wording was vague, Keidandren officials said there was no mistaking the fact that he was criticizing corporate Japan's dividend policies. And because the criticism came from the Finance Ministry, which is the most prestigious and powerful agency in the Japanese bureaucracy, corporate executives will have to pay close heed, Keidandren officials said.
The development could mark the start of a shift in Japanese business attitudes.
Japan's corporate giants are well-known for putting the interests of their customers, employees and suppliers way ahead of their shareholders. They can afford to do so without worrying about the threat of takeovers because in many cases, the majority of their shares are held by corporate allies -- typically suppliers and customers. One result is that Japanese companies tend to pay out a substantially lower percentage of their profits to shareholders than American firms do.
By indicating that it favors higher dividends, the Finance Ministry is implicitly endorsing some of the arguments advanced by American oilman T. Boone Pickens, who sparked a debate here about shareholder rights when he launched a raid on a Tokyo auto-parts company.
Pickens and his allies argue that Japanese management violates the tenets of capitalism by ignoring the interests of owners. Moreover, in Pickens's view, Japan's system of "cross-shareholding" among companies creates a club-like environment that protects the status quo and unfairly keeps newcomers from breaking into the Japanese market.
Defenders of the Japanese system said it has helped engender the nation's economic miracle by giving corporate managers the sense of security they need to invest in their companies' long-term future. The reason U.S. firms have lost out in global markets, Pickens's adversaries contend, is that American executives are excessively worried about providing shareholders with short-term rewards.
By prompting Japanese companies to boost their payouts, the Finance Ministry might help to buoy the Tokyo stock market, which despite a recent rally has been generally depressed this year.
But Keidandren officials said the ministry's move, rather than being aimed primarily at driving up stocks, is part of a longer-range reexamination of how Japanese firms raise money.