“STUPID, greedy, adulterous, irresponsible and threatening.” At least the Japanese vice-minister for the economy, speaking about equity investors in 2008, was being honest. Indeed, he could not have summed up most Japanese politicians’ contempt for shareholders any more pithily. But as Shinzo Abe, the prime minister, tries to boost a flaccid economy, official attitudes are changing at last.

Japan’s companies are sitting on ¥231 trillion ($1.9 trillion) in cash, an amount nearly half the size of the economy itself. Mr Abe wants that hoard to boost capital expenditure or wages, or to be returned to investors, who could put it to better use. He thinks a dose of shareholder capitalism will do the trick. Government bigwigs, including Mr Abe himself, now offer meetings to foreign activist investors. A new governance code, which came into force this week, seeks to break open the cosy world of the Japanese boardroom by requiring firms to appoint at least two outside directors (see article).

Big deal, say the sceptics. Japan’s corporate-governance revolution has had many false dawns. However keen the politicians now are on a bit of Anglo-Saxon greed and menace, firms themselves retain a deeply insular culture. Only 274 of some 40,000 directorships are held by foreigners. A mesh of shareholdings still binds big firms together. Japan’s business lobby group, Keidanren, fought to dilute the new reforms. The banks still keep weak companies afloat: the fact that not one of Japan’s listed firms went bankrupt last year, for the first time since 1991, reflects not just a zippier economy, but also lenders’ clubby ties to borrowers. For all his reformist zeal, Mr Abe has yet to embrace measures that make it easier for firms to hire and fire. Hobbesian, Japan is not.

Even so, there are three reasons to think that real change is under way. The first is that market pressure is adding to the political pressure. Institutional investors are increasingly benchmarking firms by their returns on equity; and no investor has more clout than the Government Pension Investment Fund, Japan’s enormous national fund, which made a big move into equities last year. Shareholder-advisory firms are doing their part, by recommending investors to ditch underperforming managers. At the moment firms are bumping up returns by buying back their shares; in time they will have to increase earnings, too.

Some of Japan’s most prominent companies are also changing their stripes. Hitachi has got rid of unprofitable units to focus on sectors like railways and infrastructure, and last autumn it severed the link between length of service and wages. Fanuc, a robotics firm with an activist on its shareholder register, set up an investor-relations hotline this year and authorised a share buy-back and bigger dividends. A showdown over awful corporate governance at a famous family-owned furniture manufacturer, Otsuka Kagu, ended this spring with a reforming daughter worsting her 71-year-old father. Conformist cultures can change quickly once a new orthodoxy forms.

Third, the need for firms to absorb hard-to-employ Japanese workers is diminishing. Lifetime employment, coupled with pay and promotion that are linked to age, not performance, has long been part of the social contract in Japanese firms. But now the working-age population is shrinking, bringing down unemployment. Panasonic, an electronics firm, has shut its “banishment room”, where surplus staff used to while away the hours with nothing to do. The argument for Japanese firms to act as a safety net is less potent than it once was.

From grey to black

But the biggest transformation must be inside companies themselves. Although relations between firms and their shareholders are becoming more productive, change has yet to penetrate within the office walls. The likes of Hitachi aside, too many firms still function as risk-averse bureaucracies. The incentives to take risks are muted if time served matters more than profits generated. Young executives still pledge obedience to older bosses to win advancement. And since older bosses receive little extra reward for outperforming—the average pay packet for chief executives at large Japanese firms is around $1m, a modest sum in international terms—it is unsurprising that few do. Introducing pay for performance would add entrepreneurial vim to Japan’s formidable strengths in technology and team spirit.

Changing corporate cultures is hard, but not impossible. Before the second world war Japan had powerful shareholders, no insistence on lifelong employment and firms were able to lay off staff when times were hard. Forget “Anglo-Saxon” capitalism. A revived Japanese sort could work just as well.