In 2013, Michael A. Osborne, then Associate Professor at the University of Oxford, published a paper estimating that 47% of working people in the United States may be replaced by machines within 20 years. It is difficult to predict the future, but many current jobs are undoubtedly at risk of disappearing.
Meanwhile, in Japan, a new profession has emerged at the heart of capitalism: independent directors. In only ten years since the introduction of the Corporate Governance Code in 2015, the number of independent directors has increased to around 10,000.
However, problems have risen to the surface. Independent directors have been criticized as being “useless” by corporate executives and as being unreliable by investors. The framework may have been established, but in reality it is not functioning properly.
First, misunderstandings about the responsibilities of independent directors must be addressed. Providing advice and contributing to decision-making are their secondary roles. Their primary role is oversight. Their responsibility is to evaluate corporate executives and to appoint and dismiss CEOs based on the evaluation. Executives, after all, are the ones being evaluated.
Improving quality is also an urgent necessity. It is strange that people with this critical role of ensuring corporate governance are not subject to formal qualifications or standardized training. The UK, the U.S., and China have certification programs for independent directors. Independent directors need to develop a deep understanding of corporate value and governance. I recommend that a qualification system in this field be developed.
Japan is now entering an era where the use of “non-consensual acquisitions ,” such as hostile takeovers or management buyouts (MBO), is spreading. In situations where stakeholders' interests conflict, the independent judgment of the board of directors is put to the test.
Executives who are skilled at value creation should be protected and those who are not should be replaced. Value-destroying acquirers must also be rejected.
Unless a board of directors is composed of knowledgeable and sophisticated independent directors, poor decision-making can undermine corporate value. The focus of the next phase of governance reform should be on enhancing the quality of the individuals who serve as independent directors, rather than merely refining the institutional framework.
>> Original text in Japanese
* Translated by RIETI.
June 23, 2026 - Published in Nihon Keizai Shimbun's "Crossroads"
