Skip to main content

Does It Pay to Invest in Japanese Women? Evidence from the MSCI Japan Empowering Women Index

Journal of Business Ethics volume 170, pages 595–613 (2021)Cite this article

Abstract

In Japan, income, authority, and prestige are unequally distributed between men and women, even if they share the same occupational level. These inequalities are perceived as an ethical issue because they go against the principle of equal treatment at work. Nowadays, Japanese companies are under growing political and regulatory pressure to increase the hiring, promotion, and empowerment of female employees. In this context, the first equity index that tracks the financial performance of the best Japanese companies in terms of gender diversity performance—the MSCI Japan Empowering Women Index (hereafter WIN)—was launched in 2010. It aims to satisfy the growing demand of investors who want to reduce gender discrimination in Japanese workplaces. This paper compares the financial performance of the WIN stock index to the conventional parent index over the period 2010–2018, offering a unique setting to assess the effects of gender diversity screens on portfolio risk-adjusted performance. Our results are robust to a battery of risk-adjusted performance indicators and clearly indicate that investing in the WIN equity index does not come at a cost compared to investing in its conventional peer. This evidence is expected to reinforce confidence of investors who have an appetite for justice in increasing their investment in financial products that support the participation and the advancement of women in the Japanese workforce.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Notes

  1. This regulatory policy coincides with the United Nations sustainable development goal 5.5 according to which it is necessary to: “Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life” and the goal 5.C according to which it is necessary to: “Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality and the empowerment of all women and girls at all levels.” (https://www.un.org/sustainabledevelopment/gender-equality/).

  2. Full details of the MSCI Japan Empowering Women Index (Win) Methodology can be accessed at https://www.msci.com/eqb/methodology/meth_docs/MSCI_Japan_Empowering_Women_Index_Methodology_Sep2017.pdf.

  3. http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/index.html.

  4. These metrics are currently used to assess the financial performance of ethical indices and funds (see, e.g., Derwall et al. 2005; Statman 2006; Bauer et al. 2007; Kempf and Osthoff 2007; Jones et al. 2008; Renneboog et al. 2008; Gil-Bazo et al. 2010; Climent and Soriano 2011; Humphrey and Lee 2011; Chapple and Humphrey 2014; Peillex and Ureche-Rangau 2013; Belghitar et al. 2014; Ashraf 2016; Nainggolan et al. 2016; Trinks and Scholtens 2017; Xiao et al. 2017; Desbrières et al. 2018).

References

  • Adams, R., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291–309.

    Google Scholar 

  • Adams, R. B., & Funk, P. (2012). Beyond the glass ceiling: Does gender matter? Management Science, 58, 219–235.

    Google Scholar 

  • Aguilera, R. V., Rupp, D. E., Williams, C. A., & Ganapathi, J. (2007). Putting the S back in corporate social responsibility: A multilevel theory of social change in organizations. Academy of Management Review, 32, 836–863.

    Google Scholar 

  • Anderson, R. C., Reeb, D. M., Upadhyay, A., & Zhao, W. (2011). The economics of director heterogeneity. Financial Management, 40(1), 5–38.

    Google Scholar 

  • Arjaliès, D. L. (2010). A social movement perspective on finance: How socially responsible investment mattered. Journal of Business Ethics, 92(1), 57–78.

    Google Scholar 

  • Ashraf, D. (2016). Does shari’ah screening cause abnormal returns? Empirical evidence from Islamic equity indices. Journal of Business Ethics, 134(2), 209–228.

    Google Scholar 

  • Assmann, S. (2014). Gender equality in Japan: The equal employment opportunity law revisited. Asia-Pacific Journal-Japan Focus, 12(45), 1–24.

    Google Scholar 

  • Barnett, M. L., & Salomon, R. M. (2006). Beyond dichotomy: The curvilinear relationship between social responsibility and financial performance. Strategic Management Journal, 27(11), 1101–1122.

    Google Scholar 

  • Bauer, R., Derwall, J., & Otten, R. (2007). The ethical mutual fund performance debate: New evidence from Canada. Journal of Business Ethics, 70(2), 111–124.

    Google Scholar 

  • Becker, G. S. (1964). Human capital theory. Columbia, New York.

  • Belghitar, Y., Clark, E., & Deshmukh, N. (2014). Does it pay to be ethical? Evidence from the FTSE4Good. Journal of Banking & Finance, 47, 54–62.

    Google Scholar 

  • Bell, M. P., McLaughlin, M. E., & Sequeira, J. M. (2002). Discrimination, harassment, and the glass ceiling: Women executives as change agents. Journal of Business Ethics, 37(1), 65–76.

    Google Scholar 

  • Bello, Z. Y. (2005). Socially responsible investing and portfolio diversification. Journal of Financial Research, 28(1), 41–57.

    Google Scholar 

  • Bénabou, R., & Tirole, J. (2006). Incentives and prosocial behavior. American Economic Review, 96(5), 1652–1678.

    Google Scholar 

  • Ben-Amar, W., Chang, M., & McIlkenny, P. (2017). Board gender diversity and corporate response to sustainability initiatives: evidence from the Carbon Disclosure Project. Journal of Business Ethics, 142(2), 369–383.

    Google Scholar 

  • Benlemlih, M., Jaballah, J., & Peillex, J. (2018). Does it really pay to do better? Exploring the financial effects of changes in CSR ratings. Applied Economics, 50(51), 5464–5482.

    Google Scholar 

  • Bernile, G., Bhagwat, V., & Yonker, S. (2018). Board diversity, firm risk, and corporate policies. Journal of Financial Economics, 127(3), 588–612.

    Google Scholar 

  • Biernat, M., & Kobrynowicz, D. (1997). Gender- and race-based standards of competence: Lower minimum standards, but higher ability standards for devalued groups. Journal of Personality and Social Psychology, 72, 544–557.

    Google Scholar 

  • Brière, M., Peillex, J., & Ureche-Rangau, L. (2017). Do social responsibility screens matter when assessing mutual fund performance? Financial Analysts Journal, 73(3), 53–66.

    Google Scholar 

  • Buchanan, S., Ruebottom, T., & Riaz, S. (2018). Categorizing competence: Consumer debt and the reproduction of gender-based status differences. Organization Studies, 39(9), 1179–1202.

    Google Scholar 

  • Byron, K., & Post, C. (2016). Women on boards of directors and corporate social performance: A meta-analysis. Corporate Governance: An International Review, 24(4), 428–442.

    Google Scholar 

  • Campbell, K., & Minguez-Vera, A. (2008). Gender diversity in the boardroom and firm financial performance. Journal of Business Ethics, 83(3), 435–451.

    Google Scholar 

  • Capelle-Blancard, G., & Monjon, S. (2012). Trends in the literature on socially responsible investment: Looking for the keys under the lamppost. Business ethics: An European review, 21(3), 239–250.

    Google Scholar 

  • Capelle-Blancard, G., & Monjon, S. (2014). The performance of socially responsible funds: Does the screening process matter? European Financial Management, 20(3), 494–520.

    Google Scholar 

  • Carhart, M. (1997). On persistence in mutual fund performance. Journal of Finance, 52, 57–82.

    Google Scholar 

  • Carpenter, M. A. (2002). The implications of strategy and social context for the relationship between top management team heterogeneity and firm performance. Strategic Management Journal, 23, 275–284.

    Google Scholar 

  • Carrasco, A., Francoeur, C., Labelle, R., Laffarga, J., & Ruiz-Barbadillo, E. (2015). Appointing women to boards: Is there a cultural bias? Journal of Business Ethics, 129(2), 429–444.

    Google Scholar 

  • Carter, D., D’Souza, F., Simkins, B. J., & Simpson, W. G. (2010). The gender and ethnic diversity of US boards and board committees and firm financial performance. Corporate Governance: An International Review, 18(5), 396–414.

    Google Scholar 

  • Carter, D., Simkins, B., & Simpson, W. (2003). Corporate governance, board diversity, and firm value. Financial Review, 38(1), 33–53.

    Google Scholar 

  • Chapple, L., & Humphrey, J. E. (2014). Does board gender diversity have a financial impact? Evidence using stock portfolio performance. Journal of Business Ethics, 122(4), 709–723.

    Google Scholar 

  • Climent, F., & Soriano, P. (2011). Green and good? The investment performance of US environmental mutual funds. Journal of Business Ethics, 103(2), 275–287.

    Google Scholar 

  • Cortez, M. C., Silva, F., & Areal, N. (2009). The performance of European socially responsible funds. Journal of Business Ethics, 87(4), 573–588.

    Google Scholar 

  • Cudd, A. E. (2015). Is capitalism good for women? Journal of Business Ethics, 127(4), 761–770.

    Google Scholar 

  • Daily, C., Certo, T., & Dalton, D. (1999). A decade of corporate women: Some progress in the boardroom, none in the executive suite. Strategic Management Journal, 20, 93–99.

    Google Scholar 

  • Derwall, J., Guenster, N., Bauer, R., & Koedijk, K. (2005). The eco-efficiency premium puzzle. Financial Analysts Journal, 61(2), 51–63.

    Google Scholar 

  • Desbrières, P., Erragragui, E., & Peillex, J. (2018). Is shariah compliant investment socially responsible? International Management, 22(3), 51–64.

    Google Scholar 

  • Diouf, D., & Hebb, T. (2016). Exploring factors that influence social retail investors’ decisions: Evidence from Desjardins fund. Journal of Business Ethics, 134(1), 45–67.

    Google Scholar 

  • Dunfee, T. W. (2003). Social investing: Mainstream or backwater? Journal of Business Ethics, 43(3), 247–252.

    Google Scholar 

  • Durand, R., Paugam, L., & Stolowy, H. (2019). Do investors actually value sustainability indices? Replication, development, and new evidence on CSR visibility. Strategic Management Journal. https://doi.org/10.1002/smj.3035.

    Article  Google Scholar 

  • El Ouadghiri, I., & Peillex, J. (2018). Public attention to “Islamic terrorism” and stock market returns. Journal of Comparative Economics, 46(4), 936–946.

    Google Scholar 

  • Erragragui, E., Hassan, M. K., Peillex, J., & Khan, A. N. F. (2018). Does ethics improve stock market resilience in times of instability? Economic Systems, 42(3), 450–469.

    Google Scholar 

  • Fama, E. F., & French, K. R. (1993). Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33, 3–56.

    Google Scholar 

  • Fama, E. F., & French, K. R. (2007). Disagreement, tastes, and asset prices. Journal of Financial Economics, 83(3), 667–689.

    Google Scholar 

  • Fama, E. F., & French, K. R. (2015). A five-factor asset pricing model. Journal of Financial Economics, 116(1), 1–22.

    Google Scholar 

  • Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210–233.

    Google Scholar 

  • Gil-Bazo, J., Ruiz-Verdú, P., & Santos, A. A. (2010). The performance of socially responsible mutual funds: The role of fees and management companies. Journal of Business Ethics, 94(2), 243–263.

    Google Scholar 

  • Gilbert, J. A., Stead, B. A., & Ivancevich, J. M. (1999). Diversity management: A new organizational paradigm. Journal of Business Ethics, 21(1), 61–76.

    Google Scholar 

  • Glac, K. (2009). Understanding socially responsible investing: The effect of decision frames and trade-off options. Journal of Business Ethics, 87(1), 41–55.

    Google Scholar 

  • Government Pension Investment Fund (GPIF). (2018). GPIF selected global environmental stock indices. Retrieved August 29, 2019 from https://www.gpif.go.jp/en/topics/GPIF%20Selected%20Global%20Environmental%20Stock%20Indices.pdf.

  • Groysberg, B., & Bell, D. (2013). Dysfunction in the boardroom. Harvard Business Review, 91, 89–97.

    Google Scholar 

  • Heinkel, R., Kraus, A., & Zechner, J. (2001). The effect of green investment on corporate behavior. Journal of Financial and Quantitative Analysis, 36(4), 431–449.

    Google Scholar 

  • Hellsten, S., & Mallin, C. (2006). Are ‘ethical’ or ‘socially responsible’ investments socially responsible? Journal of Business Ethics, 66(4), 393–406.

    Google Scholar 

  • Hillman, A. J., Cannella, A. A., & Harris, I. C. (2002). Women and racial minorities in the boardroom: How do directors differ? Journal of Management, 28(6), 747–763.

    Google Scholar 

  • Humphrey, J. E., & Lee, D. D. (2011). Australian socially responsible funds: Performance, risk and screening intensity. Journal of Business Ethics, 102(4), 519–535.

    Google Scholar 

  • Huse, M., Nielsen, S., & Hagen, I. (2009). Women and employee elected board members, and their contributions to board control tasks. Journal of Business Ethics, 89(4), 581–597.

    Google Scholar 

  • Isidro, H., & Sobral, M. (2015). The effects of women on corporate boards on firm value, financial performance, and ethical and social compliance. Journal of Business Ethics, 132(1), 1–19.

    Google Scholar 

  • Jaballah, J., Peillex, J., & Weill, L. (2018). Is being sharia compliant worth it? Economic Modelling, 72, 353–362.

    Google Scholar 

  • Jensen, M. (1968). The performance of mutual funds in the period 1945–1964. Journal of Finance, 23, 389–416.

    Google Scholar 

  • Jones, S., Van der Laan, S., Frost, G., & Loftus, J. (2008). The investment performance of socially responsible investment funds in Australia. Journal of Business Ethics, 80(2), 181–203.

    Google Scholar 

  • Kanter, R. M. (1977). Men and women of the corporation. New York: Basic Books.

    Google Scholar 

  • Kempf, A., & Osthoff, P. (2007). The effect of socially responsible investing on portfolio performance. European Financial Management, 13(5), 908–922.

    Google Scholar 

  • Konrad, A. M., Kramer, V., & Erkut, S. (2008). The impact of three or more women on corporate boards. Organizational dynamics, 37(2), 145–164.

    Google Scholar 

  • Kossek, E. E., Lobel, S. A., & Brown, J. (2006). Human resource strategies to manage workforce diversity. Handbook of workplace diversity (pp. 53–74). London: Sage.

    Google Scholar 

  • Kubota, K., & Takehara, H. (2018). Does the Fama and French five-factor model work well in Japan? International Review of Finance, 18(1), 137–146.

    Google Scholar 

  • Lee, H. (2019). Understanding ethical consumers through person/thing orientation approach. Journal of Business Ethics, 158, 358–637.

    Google Scholar 

  • Lewis, A., & Mackenzie, C. (2000). Morals, money, ethical investing and economic psychology. Human Relations, 53(2), 179–191.

    Google Scholar 

  • Markowitz, H. (1952). Portfolio selection. The Journal of Finance, 7(1), 77–91.

    Google Scholar 

  • Marshall, R. (2017). Gender inequality and family formation in Japan. Asian Anthropology, 16(4), 261–278.

    Google Scholar 

  • Matsui, K., Suzuki, H., Tatebe, K., & Akiba, T. (2014). Womenomics 4.0: Time to walk the talk. New York: Goldman Sachs.

    Google Scholar 

  • Mayer, D., & Cava, A. (1993). Ethics and the gender equality dilemma for U.S. multinationals. Journal of Business Ethics, 12(9), 701–708.

    Google Scholar 

  • MSCI. (2019). MSCI Japan Empowering Women Index (WIN), Retrieved August 29, 2019 from https://www.msci.com/msci-japan-empowering-women-index.

  • Nainggolan, Y., How, J., & Verhoeven, P. (2016). Ethical screening and financial performance: The case of Islamic equity funds. Journal of Business Ethics, 137(1), 83–99.

    Google Scholar 

  • Newey, W., & West, K. (1987). A simple positive semi-definite heteroskedasticity and autocorrelation consistent covariance matrix. Econometrica, 55, 703–708.

    Google Scholar 

  • Ngo, H. Y., Foley, S., Wong, A., & Loi, R. (2003). Who gets more of the pie? Predictors of perceived gender inequity at work. Journal of Business Ethics, 45(3), 227–241.

    Google Scholar 

  • Nomura Asset Management (2018). Nomura Asset Management to launch a new ETF designed to track the performance of the “MSCI Japan Empowering Women (WIN) Select Index”. https://www.nomuraholdings.com/news/nr/etc/20180412/nam20180412.pdf.

  • Pasewark, W. R., & Riley, M. E. (2010). It’s a matter of principle: The role of personal values in investment decisions. Journal of Business Ethics, 93(2), 237–253.

    Google Scholar 

  • Peillex, J. & Comyns, B. (2019). Why do financial companies adopt the United Nations Principles for Responsible Investment? Comptabilité-Contrôle-Audit, forthcoming.

  • Peillex, J., Erragragui, E., Bitar, M., & Benlemlih, M. (2018). The contribution of market movements, asset allocation and active management to Islamic equity funds’ performance. Quarterly Review of Economics and Finance, 74, 32–38.

    Google Scholar 

  • Peillex, J., & Ureche-Rangau, L. (2013). Is there a place for a shariah-compliant index on the Paris stock market? International Journal of Business, 18(2), 131–150.

    Google Scholar 

  • Pelled, L. H. (1996). Demographic diversity, conflict, and work group outcomes: An intervention process theory. Organization Science, 7, 615–631.

    Google Scholar 

  • Post, C., & Byron, K. (2015). Women on boards and firm financial performance: A meta-analysis. Academy of Management Journal, 58(5), 1546–1571.

    Google Scholar 

  • Pucheta-Martínez, M. C., Bel-Oms, I., & Olcina-Sempere, G. (2018). Female institutional directors on boards and firm value. Journal of Business Ethics, 152(2), 343–363.

    Google Scholar 

  • Renneboog, L., Ter Horst, J., & Zhang, C. (2008). Socially responsible investments: Institutional aspects, performance, and investor behavior. Journal of Banking & Finance, 32(9), 1723–1742.

    Google Scholar 

  • Revelli, C. (2016). Re-embedding financial stakes within ethical and social values in socially responsible investing (SRI). Research in International Business and Finance, 38, 1–5.

    Google Scholar 

  • Revelli, C. (2017). Socially responsible investing (SRI): From mainstream to margin? Research in International Business and Finance, 39, 711–717.

    Google Scholar 

  • Robinson, G., & Dechant, K. (1997). Building a business case for diversity. Academy of Management Perspectives, 11(3), 21–31.

    Google Scholar 

  • Ruiz-Jiménez, J. M., del Mar Fuentes-Fuentes, M., & Ruiz-Arroyo, M. (2016). Knowledge combination capability and innovation: The effects of gender diversity on top management teams in technology-based firms. Journal of Business Ethics, 135(3), 503–515.

    Google Scholar 

  • Sandberg, J., Juravle, C., Hedesström, T. M., & Hamilton, I. (2009). The heterogeneity of socially responsible investment. Journal of Business Ethics, 87(4), 519.

    Google Scholar 

  • Sauer, D. A. (1997). The impact of social-responsibility screens on investment performance: Evidence from the Domini 400 social index and Domini Equity Mutual Fund. Review of Financial Economics, 6(2), 137–149.

    Google Scholar 

  • Schröder, M. (2007). Is there a difference? The performance characteristics of SRI equity indices. Journal of Business Finance and Accounting, 34(1–2), 331–348.

    Google Scholar 

  • Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. The Journal of Finance, 19(3), 425–442.

    Google Scholar 

  • Sharpe, W. (1966). Mutual fund performance. Journal of Business, 39, 119–138.

    Google Scholar 

  • Shaukat, A., Qiu, Y., & Trojanowski, G. (2016). Board attributes, corporate social responsibility strategy, and corporate environmental and social performance. Journal of Business Ethics, 135(3), 569–585.

    Google Scholar 

  • Sparkes, R. (1998). Through a glass darkly: Some thoughts on the ethics of investment. Epworth Review, 25(3), 13–27.

    Google Scholar 

  • Statman, M. (2000). Socially responsible mutual funds. Financial Analysts Journal, 56(3), 30–39.

    Google Scholar 

  • Statman, M. (2006). Socially responsible indexes: Composition, performance, and tracking error. Journal of Portfolio Management, 32(3), 100–109.

    Google Scholar 

  • Terjesen, S., Sealy, R., & Singh, V. (2009). Women directors on corporate boards: A review and research agenda. Corporate Governance: An International Review, 17(3), 320–337.

    Google Scholar 

  • Tharenou, P. (2010). Women’s self-initiated expatriation as a career option and its ethical issues. Journal of Business Ethics, 95(1), 73–88.

    Google Scholar 

  • Treynor, J., & Mazuy, K. (1966). Can mutual funds outguess the market. Harvard Business Review, 44, 131–136.

    Google Scholar 

  • Trinks, P. J., & Scholtens, B. (2017). The opportunity cost of negative screening in socially responsible investing. Journal of Business Ethics, 140(2), 193–208.

    Google Scholar 

  • Tuckwell, D. (2017). Feminism and politics: The latest ETF trends. Retrieved August 29, 2019 from https://www.etfstream.com/feature/5900_feminism-and-politics-the-latest-etf-trends/.

  • UNICEF. (2011). The way forward: True gender equality.

  • Webley, P., Lewis, A., & Mackenzie, C. (2001). Commitment among ethical investors: An experimental approach. Journal of Economic Psychology, 22(1), 27–42.

    Google Scholar 

  • World Economic Forum. (2017). The global gender gap report. Geneva: Switzerland.

    Google Scholar 

  • Xiao, Y., Faff, R., Gharghori, P., & Min, B. K. (2017). The financial performance of socially responsible investments: Insights from the intertemporal CAPM. Journal of Business Ethics, 146(2), 353–364.

    Google Scholar 

  • Zelechowski, D., & Bilimoria, D. (2004). Characteristics of women and men corporate inside directors in the U.S. Corporate Governance: An International Review, 12(3), 337–342.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Léonard de Vinci Pôle Universitaire, Research Center, Paris La Défense, France

    Jonathan Peillex

  2. EM Normandie Business School, Métis Lab., Paris, France

    Sabri Boubaker

  3. IRG (EA 2354), Université Paris Est, Créteil, France

    Sabri Boubaker

  4. Kedge Business School, Marseille Cedex 9, France

    Breeda Comyns

  5. CRIISEA, Université de Picardie Jules Verne 10, Placette Lafleur, BP 2716, 80027, Amiens Cedex 1, France

    Jonathan Peillex

Authors
  1. Jonathan Peillex
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Sabri Boubaker
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Breeda Comyns
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Jonathan Peillex.

Ethics declarations

Conflict of interest

The authors of the manuscript declare that they have no conflicts of interest.

Ethical Approval

This article does not contain any studies with human participants or animals performed by any of the authors.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Peillex, J., Boubaker, S. & Comyns, B. Does It Pay to Invest in Japanese Women? Evidence from the MSCI Japan Empowering Women Index. J Bus Ethics 170, 595–613 (2021). https://doi.org/10.1007/s10551-019-04373-8

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-019-04373-8

Keywords

  • Ethical investment
  • Equity index
  • Financial performance
  • Gender diversity