Has Japan fixed its low-PBR problem?

Listed companies writing cost of capital, PBR or management conscious of the stock price in the management policy section grew slowly to 167 (4.28%) in FY2022. After the exchange's request, the count doubled each year, to 318 (8.07%) in FY2023 and 652 (16.54%) in FY2024, reaching 732 (18.74%) in FY2025. It quadrupled in three years.

In FY2026, 603 of the 2,788 reports filed so far (21.63%) mention it. Among the same companies, the count rose from 576 to 603 in a year: 117 companies added it and 90 dropped it.

AI read each paragraph mentioning cost of capital or PBR and sorted it by how specific it is, into the four types below.

1. Specific measures (share buybacks, selling cross-shareholdings, ROIC management by business, etc.)

2. Numerical targets (ROE or PBR targets, a cost-of-capital figure)

3. Statement of intent

4. Other (mention only)

* FY2026 is an early count (2,788 reports filed so far, mostly March year-ends).

Of the 732 companies writing it in FY2025, 500 (68%) have a paragraph with specific measures or numerical targets, and 232 (32%) only state their intent. This covers only the paragraphs containing these words; some companies give numerical targets elsewhere in the same report.

By industry, securities (36.4%), land transport (34.4%), iron and steel (34.2%) and nonferrous metals (33.3%) are highest. All are low-PBR industries: in FY2025 the median PBR was 0.59x in steel and 0.75x in nonferrous metals. IT and communications, with a median PBR of 2.36x, is only 7.0%. The lower the PBR, the more companies write it: 28% of companies below 1x in FY2025, against 9% of those above 3x.

TSE 33 industry groups. Only industries with at least 30 companies in FY2025, sorted by the FY2025 share. PBR only for companies whose fiscal year-end PER is available (profitable companies).

Companies below 1x book have become fewer, especially among large companies. Dai-ichi Life Research Institute counts Prime Market companies below 1x falling from 755 (50%) at the end of February 2023 to 405 (27%) at the end of February 2026. Nomura Securities puts the share of TOPIX500 stocks below 1x at about 20% in January 2026, the lowest since 2018. Across all listed companies, however, Katana counts 52.5% below 1x in FY2022 and 47.3% in FY2025: nearly half remain.

According to the Tokyo Stock Exchange, more than 90% of Prime Market companies had disclosed their approach to cost of capital and stock price by the end of July 2025, while about half of Standard Market companies had not. Only about one in five listed companies writes it in the management policy section of its annual report; many disclose it in other documents such as medium-term plans or earnings presentations. Not writing it in the annual report does not mean a company is doing nothing.

We took the 1,537 companies below 1x in FY2022, grouped them by what they wrote in their FY2023–2025 annual reports, and compared their FY2025 PBR.

Reached 1x: share at 1x PBR or more at the end of FY2025. PBR change: from the end of FY2022 to the end of FY2025 (median). Loss-making companies excluded.

Companies that wrote specific measures or targets saw their PBR rise by a median 1.20 times, more than the 1.12 times of companies that wrote nothing. Airtech Japan raised its total shareholder return ratio target to 65% or more, and NS Solutions writes that it will cut its opening cash of about ¥190 billion by around ¥100 billion over three years. Companies that only stated their intent rose 1.14 times, little different from those that wrote nothing.

Even so, the share that reached 1x or more was about the same: 17.4% for companies that wrote measures or targets, 16.5% for those that wrote nothing. The writers started from a median of 0.59x; a 20% rise only takes them into the 0.7s. Large companies have largely left the sub-1x group, but for companies starting from 0.5–0.6x, 1x is probably years away.

• Source：Tokyo Stock Exchange, recent initiatives (October 21, 2025, FSA expert panel material 5, Japanese)
• Source：Dai-ichi Life Research Institute, three years since the TSE's request: Prime Market companies by ROE and PBR quadrant (April 1, 2026, Japanese)
• Source：Nomura Securities, share of stocks below 1x PBR falls sharply (January 15, 2026, Japanese)

• Scope: listed companies (with a securities code) that filed an annual securities report for the fiscal year. Fiscal year is the year the period ends. Source: annual reports on EDINET (Japan FSA).
• We counted whether the management policy and issues-to-address section contains 資本コスト (cost of capital), PBR (in half- or full-width letters) or 株価を意識 (conscious of the stock price). Mentions of only capital efficiency or ROE are not counted. Reports up to about FY2016 have only the issues-to-address section, so both are treated as one section.
• FY2026 covers reports filed by October 25, 2026, mostly March year-end companies. December year-end companies are not yet included.
• AI read each relevant paragraph and assigned one of the four types; a company with several paragraphs can count in several types. Of 40 FY2025 paragraphs checked by a person, 34 were classified reasonably. Most misses confused specific measures with numerical targets, so the insight section treats the two together.
• PBR is each fiscal year-end's actual PER times net income (the year-end market capitalization) divided by shareholders' equity. Loss years have no PER and are excluded. The sub-1x share is among companies whose PBR could be calculated.
• The follow-up in the insight section covers the 1,537 companies below 1x in FY2022 whose FY2025 PBR could also be calculated. A company with a measures-or-targets paragraph in any of FY2023–2025 counts as measures or targets; one that wrote the words without such a paragraph counts as intent only. This does not show that writing it caused PBR to rise.
• The FY2017 company count (3,391) is lower than the actual number of listed companies; some companies that later delisted may be missing.

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