David Herro, a money manager who oversees $35 billion (¥4.35 trillion) worth of investments and learned about Japanese corporate governance the hard way, says for all Prime Minister Shinzo Abe's efforts, the nation remains 30 years behind in this area.

Boards are too big and lack diversity, while balance sheets have too much cash, said the chief investment officer of Harris Associates LP. Herro, whose firm was one of the largest shareholders in Olympus Corp. during its $1.7 billion accounting fraud, says corporate Japan is held back by reluctance to welcome outsiders and he's not sure companies buy the government's push for change.

"Japan has gone from zero to two" on the scale, Herro, named Morningstar Inc.'s international stock fund manager of the decade in 2010, said from Chicago on May 20, referring to the overhaul of rules for companies in the past two years. "It's improving. But we need to get to eight, nine or 10."