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Announcement of the Characteristics of High ROE (Return on Equity) Enterprises Revealed through “Competitive IT Strategy Company Stock Selection”

The Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock Exchange (TSE) jointly determined the Competitive IT Strategy Company Stock Selection, and METI announced the enterprises on May 26, 2015. This selection is one of the efforts for the promotion of strategic IT utilization in Japan.
The analysis of enterprises which applied for the “Competitive IT Strategy Company Stock Selection” showed common characteristics regarding the efforts made for IT utilization at enterprises whose ROE exceeded 8%. METI hereby announces these points.
METI continues to promote efforts made for “Competitive IT Strategies,” aiming at improvements in earning power and the mid- to long-term growth of enterprises through such efforts.

1. Outline of this survey

When determining the “Competitive IT Strategy Company Stock Selection,” METI sent out a survey sheet in questionnaire form asking about efforts regarding IT utilization by each enterprise in December 2014, targeting all listed enterprises on the TSE.
METI received responses from 210 enterprises and determined the stock selection while analyzing the answers from the enterprises.

2. Main points of the results of the analysis

Through the analysis of the answers, METI verified the correlations between business performance and status of IT utilization, and identified the common characteristics of the enterprises whose ROE exceeded 8%.
Specifically, METI identified common characteristics such as leadership by managers themselves in utilizing IT, assignment of IT human resources to business departments, and implementation of in-house personnel development.
It is presumed that improvements in earning power through the practical use of IT seem to have been achieved through organizational efforts at the managerial level integrated with investment in IT.
(Please see the attached reference materials for further information.)

* An ROE (Return on Equity) of 8% is considered the minimum target that an enterprise is expected to commit to achieve as the first step in order to be recognized by global investors.
Although the ROE of Japanese enterprises has tended to increase recently, it remains at a lower level than capital costs, for example, and it has been below 5% on average for a long time.
(Sources: Data from the Final Report of the Ito Review “Competitiveness and Incentives for Sustainable Growth: Building Favorable Relationships between Companies and Investors” Project, August 2014)

3. Examples of analysis

(1) In high earning power enterprises, the top managers themselves have great interest in IT.

(2) High earning power enterprises assign IT human resources to business departments.

(3) High earning power enterprises proactively explain efforts regarding IT to shareholders.

(Reference) Common characteristics of high ROE enterprises that were identified by this survey

1. Top managers

  • Have great interest in IT themselves.
  • Make efforts for the renovation of information systems themselves.
  • Recognize and deal with information security risks.

2. Human resources

  • Assign IT human resources to business departments.
  • Develop IT human resources in house.

3. Efforts

  • Have started the “practical use of IT for business innovation” earlier than any other competitors.
  • Proactively explain efforts regarding IT to shareholders.

Reference

Characteristics of IT utilization by high ROE enterprises(PDF:363KB) PDF File(in Japanese)

Release date

July 15, 2015

Division in Charge

Information Service Industry Division, Commerce and Information Policy Bureau

Related Information

Information Policy

Ministry of Economy, Trade and Industry
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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