[Japan] Firms with more female directors outperforming peers

According to new research, Japanese companies with a greater number of female directors tend to beat their peers in terms of stock market performance, The Japan Times reports.

The analysis by Bloomberg Intelligence showed that over three and five years, companies ranked in the top 10 per cent for female directorships outperformed the Topix by about 7 per cent. The consumer goods sector led the gains, a report by Yasutake Homma - BI ESG analyst - found.

The report suggests a potential upside for Japanese stocks if firms make efforts to close the gap with global peers in terms of their female representation on boards. 

Women reportedly accounted for 15.5 per cent of director roles at Japan’s largest companies in 2022, compared with 31.3 per cent in the US, according to the OECD.

Research by Homma revealed that Sony Group raised its proportion of female directors to 33 per cent in the fiscal year from April 2020, from 15 per cent two years earlier, topping the averages for Topix firms of 7 per cent and 5 per cent, respectively.

In the five years from September 30, 2018, Sony shares rose 76 per cent compared with 28 per cent for Topix. In the three years from September 30, 2020, Sony rose 52 per cent versus 43 per cent for the Topix.

A draft plan issued by the Gender Equality Bureau reportedly said that Japan will aim to have women make up at least 30 per cent of directorships at major firms by 2030. The plan reportedly stated that more diversity can contribute to innovation and growth.

Investors including Sumitomo Mitsui Trust Asset Management and Nomura Asset Management already take female representation on boards into account and vote against board-election proposals if female directors aren’t included.

Unfortunately, the positive impact of having more women in leadership roles hasn’t translated to enhanced compensation for women in line with their contributions. Japan has one of the worst gender pay gaps among nations in the OECD, an analysis of 2,800 companies by advisory firm WTW and others found.

Source: The Japan Times

According to new research, Japanese companies with a greater number of female directors tend to beat their peers in terms of stock market performance, The Japan Times reports.

The analysis by Bloomberg Intelligence showed that over three and five years, companies ranked in the top 10 per cent for female directorships outperformed the Topix by about 7 per cent. The consumer goods sector led the gains, a report by Yasutake Homma - BI ESG analyst - found.

The report suggests a potential upside for Japanese stocks if firms make efforts to close the gap with global peers in terms of their female representation on boards. 

Women reportedly accounted for 15.5 per cent of director roles at Japan’s largest companies in 2022, compared with 31.3 per cent in the US, according to the OECD.

Research by Homma revealed that Sony Group raised its proportion of female directors to 33 per cent in the fiscal year from April 2020, from 15 per cent two years earlier, topping the averages for Topix firms of 7 per cent and 5 per cent, respectively.

In the five years from September 30, 2018, Sony shares rose 76 per cent compared with 28 per cent for Topix. In the three years from September 30, 2020, Sony rose 52 per cent versus 43 per cent for the Topix.

A draft plan issued by the Gender Equality Bureau reportedly said that Japan will aim to have women make up at least 30 per cent of directorships at major firms by 2030. The plan reportedly stated that more diversity can contribute to innovation and growth.

Investors including Sumitomo Mitsui Trust Asset Management and Nomura Asset Management already take female representation on boards into account and vote against board-election proposals if female directors aren’t included.

Unfortunately, the positive impact of having more women in leadership roles hasn’t translated to enhanced compensation for women in line with their contributions. Japan has one of the worst gender pay gaps among nations in the OECD, an analysis of 2,800 companies by advisory firm WTW and others found.

Source: The Japan Times