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Stocks

Managerial acumen becoming key indicator for investors

TOKYO -- Investors have taken notice of a new wave of strong leaders emerging to helm Japanese companies, with their stocks becoming a barometer of management's ability to follow through with bold action.

     On Tuesday, news that Suntory Holdings will name Lawson Chairman Takeshi Niinami as president buoyed the stock of core unit Suntory Beverage & Food by 3%. With members of the founding family having headed the group until now, investors wagered that the new chief, with his years of experience at the major convenience store operator, will lead the company to new heights.

     Companies with effective management teams are increasingly drawing up sweeping growth strategies, and investors have grown more attentive to corporate leadership in general.

     Major acquisitions serve as a gauge of the top executive's capabilities. Last year, mobile phone carrier SoftBank acquired U.S. peer Sprint, while housing material provider Lixil brought German household fixture giant Grohe under its wing. This year, Suntory Holdings bought U.S. liquor maker Beam, and Dai-ichi Life Insurance is readying to purchase Protective Life of the U.S. Despite their large scale, many of these deals were closed swiftly.

     Corporate leaders are "bold and speedy in decision-making," says Kensaku Bessho, managing director of the investment banking unit at Mitsubishi UFJ Morgan Stanley Securities.

     Lixil, which has actively sought acquisitions, welcomed Yoshiaki Fujimori from General Electric Japan as its new president back in 2011.

     Companies piloted by skillful executives will grow earnings, and the ranks of such corporate managers will grow in Japan, says Tomonori Ito, professor at Hitotsubashi University's Graduate School of International Corporate Strategy, who has years of experience in investment banking. "When changes in the business environment require changes at the company, outside help will be necessary as well," he noted.

     In the U.S., Louis Gerstner, formerly chairman of RJR Nabisco, joined IBM in 1993 and is known for leading the computer maker's rebuilding efforts.

     Stock price movements underscore the impact of charismatic leaders. Since the end of 2008, immediately following the Lehman shock, shares of SoftBank, led by President Masayoshi Son, and Nidec, overseen by Shigenobu Nagamori, have risen notably.

(Nikkei)

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