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What is the perception of corporate governance in Japan?

Seta:  It is a rapidly evolving field in terms of understanding.  In the last couple of years, lots of people have taken interest. Even as recently as 3 to 5 years ago, I don't think many people actually knew what the word meant, so we have come a long way in such a short space of time. 

But there are still certain misunderstandings about corporate governance in Japan.  I think it's partly the wording that is being used.  If you translate "corporate governance" directly into Japanese, "kigyo touchi," it gives a very strict kind of nuance of "being ruled", and it gives an image of structural schematics describing the contractual relationship between the managers and shareholders.  The term "corporate governance", in my view, is more about fiduciary relationships between managers and shareholders as opposed to who governs who. 

What level of governance is preferred when considering a company for investment?

Seta:  Any company that demonstrates an understanding of corporate governance and takes care to demonstrate that they have shareholders that they need to serve, that would give more comfort to the investor.

In terms of making an investment decision, corporate governance issues do not come in as highly as compared to traditional investment criteria. Corporate governance is important for investment decisions in appraising, not about the immediate-term performance improvement and therefore share price improvement, but the long-term projection of company performance.

From an investor's perspective, if a company is doing very well financial performance-wise, then the quality of corporate governance practice does not seem to make too much difference.  However, if financial performance is chronically poor in a particular company, then generally, you can find some reason within corporate governance issues that could be improved and that may lead to improved corporate performance.