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Japan overtakes US in listed companies but quality lags

Big differences remain in market discipline and corporate governance

Employees of the Tokyo Stock Exchange work in Tokyo. Japan has more listed companies than the U.S., but total market capitalization is much smaller.   © Reuters

NEW YORK -- Japan now has more listed companies than the U.S., giving investors plenty of choices. But that does not mean the Japanese market is more attractive than its U.S. counterpart. Rather, it is more a result of the lag in Japan in strengthening market discipline and shaking out lower-quality companies.

At the end of 2017, there were about 3,700 listed companies in Japan, including those listed on regional stock exchanges. The U.S. is in the 3,600s, excluding foreign companies, according to data from Bloomberg and others.

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