Report published September 28, 2026
Japan Equity Strategy: Corporate Reforms in 2026 – J.P. Morgan Research Report
J.P. Morgan · September 28, 2026
Japanese corporate reforms in 2026 are deepening as companies transition from externally driven shareholder payouts to internally driven long-term ROIC and ROE enhancements via growth capex and restructuring. J.P. Morgan expects TOPIX ROE to reach 10–11% in FY26–27 and 12% by FY28, underpinned by margin expansion and index restructuring.
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Finvaulta summarizes J.P. Morgan's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.Japanese corporate reform is entering a new phase where companies lead value creation through growth investment, M&A, and restructuring rather than relying on external discipline or activism.
- 2.Revisions to the Corporate Governance Code and Takeover Guidelines aim to foster long-term corporate value maximization rather than a retreat from shareholder returns.
- 3.The share price impact of activist campaigns has faded and shortened in duration, marking a shift to corporate-driven value enhancement.
Table of Contents
- Summary
- Corporate reform entering new phase of focus on long-term corporate value
- Corporate reform entering a new stage in 2026
- Global investors concerned about a slowdown in reforms
- Shift in emphasis not from shareholders to companies, but to long-term corporate value
- Increase in ROIC and greater returns on expanded investment
- ROE rising to 10-11% at a faster pace
- Growth investment set to expand
- ROE contribution from growth investment
- Drop in activist investors' impact on share prices
- TOPIX reform “Phase 2”, reduce number of listed companies from 1,700 to around 900
- Companies with growth investment capabilities
- 2026 corporate reform: Six facts
- (1) Corporate ROE and margins
- (2) ROE and ROE-P/B by company and sector
- (3) Cash generation and capital allocation
- (4) Corporate business reorganization, M&A, and strategic shareholdings
- (5) Activist involvement
- (6) Shareholder returns
Report data
Figure 2: Progress of corporate reform — as of September 25, 2026.
| Metric | Estimate | Context |
|---|---|---|
| TOPIX target constituent count under Phase 2 reform | 900 companies | The number of constituents will be narrowed from approximately 1,700 to the 900-company range starting in October 2026 through October 2028. |
| TOPIX forecast ROE | 12% | With a time lag from growth investment and ROIC gains, ROE of 12% is projected from FY2028 onward. |
| Proportion of TOPIX companies with P/B above 1x | 70% | The ratio of companies with P/B above 1x rose from around 50% at end-FY2022 to 70% as of August 2026. |
| TOPIX companies' strategic shareholding unwinding | 9.2 trillion JPY | Japanese companies' strategic shareholdings decreased by about ¥9.2 trillion in FY2025 to approximately ¥52 trillion. |
| Announced share buyback amount | 22 trillion JPY | Buybacks expanded from ¥18 trillion in FY2024 to ¥22 trillion in FY2025. |
Reports in this series
Japan Equity Strategy is shown in chronological order through this edition, published on September 28, 2026.
Part of the Japan Equity Strategy series — view all 3 editions
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