Academic Track:09 Academic Research and Insight Application of XBRL to proxy voting -- what are the chances?! --

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Academic Track:09 Academic Research and Insight Application of XBRL to proxy voting -- what are the chances?! -- Nomura Research Institute, Ltd. Data Analyst Chie Mitsui

Contents for Today s Session Shareholder voting by Institutional Investors Current issues of Proxy Voting in Japanese companies Screening approach Feasibility of screening with XBRL for Proxy Voting Feasibility of two monitoring using XBRL What We Can Expect? What s the Next Step? About Nomura Research Institute; A research institute which is a member of a group companies in financial sectors. Nomura security broker was a parent company before we went to public Tokyo Stock Exchange. Our department is providing information and system solution for mainly asset management, trust, advisory, etc.

Shareholder voting by Institutional Investors (1) Regulatory Changes; New disclosure rule for their voting decisions (2) Responsibility as institutional investors in monitoring Corporate Governance (3) Action to require companies to enhance their own value for longterm investment.. Will introduce the Japanese Case.

Definition and categorized of Institutional Investors Individual Short Term Activist Hedge Fund ACTIVE Engagement long-term concentrated investments Long Term Holding a large number of shares for long-term investment purpose. Doesn t have much information of each company. Requires them to enhance performance and keep good governance PASSIVE Today s theme Pension Passive Bank Group companies

Current issues of Proxy Voting in Japanese companies 1. Japanese company s agenda of AGM usually has many shareholder resolutions Institutional Investor How It Affects? Takes time to read through all agenda Need a lot of human resources to exercise voting rights 2. limited time; because many Japanese companies have their AGM on certain dates. Listed Companies Long-term passive investors are preferred. Company wants them to understand agenda well and act to vote only for their performance Infrastructure is required to allow such Institutional Investors to reduce Cost

Screening approach Ideas in Quants Analysts Can we use XBRL to Screening as financial data? Idea for efficient voting Can we eliminate the company which we vote YES? So that we can spend time to think carefully others. Quant Analysts Screening shares for buy As Share-holders Screening for Say Yes XBRL Company Performance data no XBRL nonfinancial data Past information New agenda? Can We use XBRL for screening past information and new aggenda? Inputting data needs Cost and Man power

Feasibility of screening with XBRL for Proxy Voting How we can describe agenda and voting policy of asset management companies, as XBRL? Area Tokyo Stock Exchange Japanese FSA IFRS IIRC latest XBRL achievement Corporate governance report Name of directors, Contents Anti-takeover measure etc Tagging for all part of security reports (Planning for next generation EDINET in 2013) Discussion about tagging for Management Commentary Integrated reports Can we use new applied or planned architecture for agenda?

Feasibility of screening with XBRL for Proxy Voting Past Financial Reports Agenda of AGM Revenue Capital Investment R&D Deposit Dividends Directors Outside Director Evaluate Each fact Consistency Using Same tags Closing Account Planned investment Revenue Proposed appropriation of retained earnings Election of Directors. Corporate governance Measures to prevent acquisition

Feasibility of screening with XBRL for Proxy Voting Evaluating each fact in resolutions of agenda. Same Taxonomy Earning digest AGM agenda Security report Filing to Tokyo Stock Exchange Sending to Shareholders AGM Submit Security report to FSA End 6W 3M Time

Feasibility of two monitoring using XBRL Government disclosure system -- EDINET -- Asset Management Monitor adequacy the voting results Sponsors XBRL XBRL XBRL 2012 FY 1Q,2Q,3Q,4Q 2011 FY. Proxy voting with its own voting policy XBRL Home Page Listed company Agenda of AGM Trial check the voting result before AGM

What We Can Expect? Global Institutional Investors would be able to Exercise voting rights Institutional Investors can judge the agenda using multiple year qualitative information. Institutional Investors Institutional Investors Global Institutional Investors Can Access to the Qualitative Info Unified XBRL Information Companies in Japan, US, EU, Asia. Investors can refer past information and agenda together Agenda of AGS 2012 FY 1Q, 2Q, 3Q, 4Q 2011FY.. XBRL XBRL XBRL XBRL XBRL XBRL XBRL XBRL

What s the Next Step? Issues to be resolved We should discuss about "facts" which set on instance of XBRL. Making rule of cords for name of executive, types of dividends, type of measures to prevent acquisition, to be known global investors. Since these information is word, for non-english speaking countries, flags are better to understanding. We should collect more opinions from both companies and investors, globally.