Korea's Value-Up Program Lags Japan After Two Years; Lawmakers Weigh Mandatory Disclosures

Two years after its launch, Korea's "Corporate Value-Up Program" shows significantly lower participation rates than Japan's, with only 39.4% of KOSPI firms disclosing plans.

This gap is largely attributed to the program's voluntary nature and weaker incentives, which have failed to compel a majority of companies to articulate their value enhancement strategies.

In response, lawmakers are considering legislation to mandate value-up plans for companies with persistently low price-to-book ratios (P/B), shifting the policy from encouragement to potential compulsion.

Korea's 'Corporate Value-Up Program,' launched two years ago to resolve the chronic 'Korea Discount,' is now at a critical crossroads.

The program's report card after two years shows a significant gap compared to its Japanese benchmark. As of April 2026, only about 39.4% of companies on the main KOSPI board and a mere 18.3% on the KOSDAQ have disclosed their value-up plans. This contrasts sharply with Japan's Tokyo Stock Exchange, where disclosure rates among top-tier companies soared past 90% by early 2025, highlighting a difference in corporate response and policy effectiveness.

So, why the slow adoption in Korea? The primary reason lies in the program's initial design. First, it was launched as a voluntary initiative. Unlike a mandate, it relied on incentives like auditor relief and reputational encouragement through a 'Value-Up Index' and awards. This 'carrots' approach proved less compelling than the strong, exchange-led pressure seen in Japan. Second, investors pointed out from the beginning that the incentives, particularly tax benefits, were not substantial enough to drive widespread participation. Regulators later tried to lower the barrier by easing guidelines to allow more qualitative goals, but this only led to a modest increase in disclosures.

This sluggish progress has prompted a significant policy shift. With many major corporations, especially in the financial sector, still trading below their book value (P/B ratio under 1.0), political pressure has mounted. In response, lawmakers introduced a bill in March 2026 to potentially mandate value-up plans for companies that have a P/B ratio below 1.0 for two consecutive years. This marks a potential transition from gentle persuasion to outright compulsion.

Amidst this, companies like Meritz Financial Group are hailed as a 'model case.' What sets them apart is not a single announcement, but a commitment to continuous communication—providing regular updates on their capital return policies and shareholder return framework. This is the ultimate goal of the program: to foster an ongoing dialogue between companies and the market, leading to sustainable value creation and finally closing the 'Korea Discount.' The debate now is whether compulsion is the necessary catalyst to make this the norm, not the exception.

P/B Ratio (Price-to-Book Ratio): A financial metric used to compare a company's market value to its book value. A ratio below 1 suggests the stock may be undervalued.
KOSPI (Korea Composite Stock Price Index): The main stock market index of South Korea, representing all common stocks traded on the Korea Exchange.
Korea Discount: A term referring to the tendency for South Korean companies to have lower valuations compared to similar firms in other countries, often attributed to factors like corporate governance issues, low dividend payouts, and geopolitical risks.

Korea's Value-Up Program Lags Japan After Two Years; Lawmakers Weigh Mandatory Disclosures

Two years after its launch, Korea's "Corporate Value-Up Program" shows significantly lower participation rates than Japan's, with only 39.4% of KOSPI firms disclosing plans.

This gap is largely attributed to the program's voluntary nature and weaker incentives, which have failed to compel a majority of companies to articulate their value enhancement strategies.

Korea's 'Corporate Value-Up Program,' launched two years ago to resolve the chronic 'Korea Discount,' is now at a critical crossroads.

P/B Ratio (Price-to-Book Ratio): A financial metric used to compare a company's market value to its book value. A ratio below 1 suggests the stock may be undervalued.
KOSPI (Korea Composite Stock Price Index): The main stock market index of South Korea, representing all common stocks traded on the Korea Exchange.
Korea Discount: A term referring to the tendency for South Korean companies to have lower valuations compared to similar firms in other countries, often attributed to factors like corporate governance issues, low dividend payouts, and geopolitical risks.