Journal of The Japanese and International Economies 62 (2021) 101163

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Journal of The Japanese and International Economies

journal homepage: www.elsevier.com/locate/jjie

Female CEOs on Japanese corporate boards and firm performance

Katsuyuki Kubo *, Thanh Thi Phuong Nguyen
School of Commerce, Waseda University, Japan

A R T I C L E I N F O A B S T R A C T

JEL classification: This paper examines the effects of female chief executive officers (CEOs) on firm performance. Using data on
L25 nonfinancial listed firms in Japan, we show that only 0.8% of some 42,000 firm-year observations have female
G32 CEOs. There is also little evidence that firms appoint more females as CEOs during our sample period. While the
G38
stock market reacts positively to the introduction of a firm’s first female CEO, the relationship between CEO
Keywords: gender and firm accounting performance is generally not strong. However, when we classify the type of female
Female CEO
CEO, the estimated coefficient for a founder female CEO and Tobin’s Q is positive and significant.
Corporate governance
Firm performance
Japan

1. Introduction
Women are known to account for a very small share of top positions
in Japan, an issue that has attracted particular attention in recent years
with “Womenomics” being part of Prime Minister Shinzo Abe’s long-
standing campaign to empower and engage more women in leader­
ship. In 2014, Prime Minister Abe made a speech at the World Economic
Forum, stating that “Japan must become a place where women shine. By
2020 we will make 30% of leading positions to be occupied by women”1.
The absence of women in top positions in Japan is particularly
serious in business. At the same time, we know surprisingly little about
top female executives in large companies in Japan. Who are they? Are
there any differences in the performance of firms managed by female
CEOs and those managed by their male counterparts? In addressing this
research gap, this paper provides useful insights into female CEOs in
Japan and empirical evidence concerning their impact on firm perfor­
mance. To conduct this research, we constructed a large database of
female CEOs in all listed nonfinancial firms in Japan from 2004 to 2015.
The novelty of our research lies in this data set, where we painstakingly
collected detailed information on every female CEO by hand.
Using our database, we confirm that the number of female CEOs in
Japan is indeed very small. Of our some 42,000 firm-year observations,
we find only 0.8% reflect a female CEO, with just 74 individual female
CEOs leading some 77 listed firms during this period. This figure is
substantially smaller than the 5% of female CEOs in China (Liu et al.,
2014), 4.8% in Fortune 500 firms, 3% in the largest 145 Scandinavian
companies, and the average of 9.4% across a sample of 18 European
countries documented by Faccio et al. (2016).
In terms of findings, we examine the determinants of a firm having a
female CEO and find that firms run by female CEOs are often younger,
have smaller boards, more female directors, less leverage, and higher
CEO and foreign ownership ratios. There is little suggestion that the
proportion of female CEOs was increasing in Japan during our sample
period and therefore little evidence that the “Womenomics” policy has
been successful in encouraging firms to adopt female CEOs.
While several studies concern the relation between CEO gender and
firm performance (Brinkhuis and Scholtens, 2018; Faccio et al., 2016;
Hanousek et al., 2019; Khan and Vieito, 2013; Kirsch, 2018; Kolev,
2012; Lam et al., 2013), the results are generally mixed. One reason may
be that these studies do not typically distinguish between female CEOs
belonging to the founding family and other female CEOs. In support of
this argument, previous studies show that a significant proportion of
listed firms around the world are controlled by founding families
(Anderson and Reeb, 2003; Faccio and Lang, 2002). Further, there is a
difference in performance between firms controlled by professional
managers and founding families (Anderson and Reeb, 2003; Faccio and
Lang, 2002; Mehrotra et al., 2013; Saito, 2008; Villalonga and Amit,
2006). Therefore, it is important to distinguish between firms run by

* Corresponding author at: School of Commerce, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050, Japan.
E-mail address: kkubo@waseda.jp (K. Kubo).
1
However, there are reports that Japan will delay this target date. “Japan to delay ‘Womenomics’ target for female leaders by up to a decade: Media”, Reuters wire
service content, June 30, 2020.

https://doi.org/10.1016/j.jjie.2021.101163
Received 16 December 2020; Received in revised form 6 August 2021; Accepted 10 August 2021
Available online 13 August 2021
0889-1583/© 2021 Elsevier Inc. All rights reserved.
K. Kubo and T.T.P. Nguyen
founding families and those managed by professional managers2.
One of the most important contributions of this paper is that we
classify female CEOs into three types based on their appointment
background: female CEOs who are a founder, an heir that inherited the
firm from a family member, and other. A founder CEO is one of the
original founders of the firm or was a main executive when the company
was founded. An heir CEO is the heir of the firm founder. We refer to all
other female CEOs as ‘sarariwoman CEOs’, being merely a promoted
employee or recruited executive with no direct tie to company
ownership3.
We investigate the relation between female CEOs and firm perfor­
mance using a variety of methods, including ordinary least squares
(OLS) and fixed effects regressions, instrumental variable (IV) two-stage
least squares (2SLS) estimation, propensity score matching (PSM),
difference-in-differences (DiD) estimation, and event studies. We find
that the announcement of a female CEO appointment, when firms first
switch from a male to a female CEO, is associated with positive and
statistically significant abnormal returns. However, in general, the
relationship between CEO gender and firm accounting performance is
not strong. Nevertheless, when we classify the type of female CEO, the
coefficient for founder female CEO and Tobin’s Q is positive and sig­
nificant in the fixed effects regression. While the estimated coefficients
for heir and sarariwoman CEOs vary and are not significant.
There are a number of advantages in using Japanese data to conduct
this research, as the environment and culture of Japanese firms differ
from the corporate contexts previously examined in the existing litera­
ture. First, boardrooms in Japan are frequently composed of male inside
directors that joined the firm as undergraduates and were subsequently
promoted internally after dozens of years in service (Aoki et al., 2007).
As top managers are accustomed to working in male-only environments,
the impact of having a female as their boss may be greater in Japan than
in Western countries.
Second, previous studies show that the relation between female
representation and firm performance depends on the business environ­
ment. According to Post and Byron’s meta-analysis of the effect of fe­
male representation on the board of directors (Post and Byron, 2015),
there is a positive relation between female board representation and
firm performance in countries with stronger shareholder protection. In
addition, they show that the relationship between female representation
and performance depends on societal gender parity. Considering the
substantial differences in corporate governance between Japan and
Western countries4, it is important to examine the effects of female
representation on large companies in the former.
The rest of this paper is organized as follows. Section 2 reviews the
related literature and provide hypotheses regarding the relation be­
tween female CEOs and firm performance. Section 3 explains the
research data and methodology. Section 4 presents the main empirical
results and Sections 5 conducts some tests of their robustness. Section 6
concludes the paper.
2. Related literature
2.1. Why does CEO gender matter?
There are several possible theories concerning the relationship be­
tween CEO gender and performance. First, it is clear CEOs can affect firm
2
Amore et al. (2014) show that the presence of a female director has a
positive impact on performance in firms led by female leaders using a sample of
family firms in Italy.
3
Mehrotra et al. (2013) defined sarariman from the English language sala­
ryman, with the connotation of a manager who works long hours but does not
control his own destiny.
4
For a discussion of corporate governance in Japan, see Aoki et al. (2007),
Franks et al. (2014), and Saito (2015).
2
Journal of The Japanese and International Economies 62 (2021) 101163
behavior and firm performance (Finkelstein et al., 2009). Further, the
personal characteristics of CEOs are recognized as an important deter­
minant of a firm’s management style (Bertrand and Schoar, 2003;
Bloom and Van Reenen, 2010; Kaplan et al., 2012) and firm value. At the
same time, the experimental economics literature reveals a difference in
the risk, social, and competitive preferences of males and females
(Croson and Gneezy, 2009).
These arguments are consistent with a literature that demonstrates
differences in behavior between firms managed by female and male
executives. Overall, female CEOs are less overconfident (Barber and
Odean, 2001; Chen et al., 2019; Deaux and Farris, 1977; Lundeberg
et al., 1994), more risk averse (Bertrand, 2011; Faccio et al., 2016), and
more reluctant to engage in criminal activities such as bribery (Dollar
et al., 2001; Hanousek et al., 2019; Swamy et al., 2001) than are their
male counterparts.
Second, there are differences in other characteristics between female
and male CEOs. According to upper echelon theory, the characteristics
of their top managers predict firm strategic choices and performance
(Carpenter et al., 2004; Hambrick, 2007; Hambrick and Mason, 1984).
These characteristics include both observable features, such as age and
education, and psychological features, such as the cognitive base and
values. Together, these arguments support the importance of dis­
tinguishing between several types of female CEOs, as these also sup­
posedly display different characteristics.
A common perception is that there is a glass ceiling preventing the
promotion of women to the highest positions in firms (Adams and Funk,
2012; Kanter, 1977; Matsa and Miller, 2011; Morisson et al., 1987).
Those successfully promoted to top positions might have a particular set
of skills needed for promotion within the organization not required for
founding family members5. There is also a difference in the character­
istics of founders and heirs. If this is the case, we expect that there will
also be a difference in the performance of firms managed by different
types of female CEOs.
2.2. Female leadership and firm performance
2.2.1. Related literature
The relation between CEO gender and firm performance is frequently
researched (Brinkhuis and Scholtens, 2018; Faccio et al., 2016; Han­
ousek et al., 2019; Khan and Vieito, 2013; Kolev, 2012; Lam et al.,
2013), although the literature thus far again has provided mixed results.
Several studies have found a positive relation between women in top
management positions and firm performance. Khan and Vieito (2013)
used a panel of US firms from 1992 to 2004 to examine the effects of CEO
gender on firm performance and risk, showing that firms managed by
female CEOs were associated with relatively better performance than
those managed by males.
Other studies find little evidence of a relation between CEO gender
and firm performance. Faccio et al. (2016) reported that firms run by
female CEOs tend to make less risky financing and investment choices,
meaning that female CEOs do not appear to allocate capital as efficiently
as do male CEOs. Hanousek et al. (2019) used a unique data set of 14
countries to study the effects of corruption and found that firms with a
female CEO have a lower propensity to bribe, implying that female CEOs
may be detrimental to efficiency in high-corruption environments.
Brinkhuis and Scholtens (2018) compared the stock price reaction
following the appointment of women vs. men to top executive positions
and found no statistically significant difference.
5
Social role theory states that female stereotypes are incompatible with
leadership positions (Eagly, 1987; Scott and Brown, 2006). This perceived in­
compatibility derives from the fact that male stereotypes are compatible with
successful leadership characteristics such as task and achievement orientation,
whereas female stereotypes are associated with personal and relationship ori­
entations (Gupta et al., 1983).
K. Kubo and T.T.P. Nguyen
In addition, several studies examine the effect of board gender di­
versity (Adams and Ferreira, 2009; Campbell and Mínguez-Vera, 2008;
Conyon and He, 2017; Dezso and Ross, 2012; Green and Homroy, 2018;
Gregory-Smith et al., 2014; Levi et al., 2014; Liu et al., 2014; Sila et al.,
2016; Tanaka, 2019). Some of these find that board diversity leads to
better performance, while others find no such clear relationship. Liu
et al. (2014) used data on Chinese listed firms to examine the effect of
board gender diversity on firm performance and found a positive and
significant relation between them.
Levi et al. (2014) documented that female directors create share­
holder value through their influence on acquisition decisions, and that
with female directors on the board, firms are less likely to make acqui­
sitions in the first instance; if they do, they pay a lower bid premium.
Green and Homroy (2018) used information on the gender of the chil­
dren of CEOs as a source of exogenous variation in female director ap­
pointments and identified a robust positive effect of female board
representation on firm performance. Tanaka (2019) concluded that
outside female directors are positively associated with firm performance
in Japan.
However, some studies document a negative relation or no relation
at all between board diversity and firm performance. Adams and Fer­
reira (2009) suggested that gender-diverse boards have fewer atten­
dance problems with committees. At the same time, they found a
negative relation between board gender diversity and firm performance.
Gregory-Smith et al. (2014) used UK data and found no evidence that the
gender composition of the board affects firm performance, while
(Campbell and Mínguez-Vera, 2008), based on a sample of Spanish
firms, found no clear relationship between female board representation
and corporate value. Sila et al. (2016) also used UK data and found no
evidence that female boardroom representation influenced equity risk.
Overall, the evidence on the relationship between CEO or board gender
diversity and firm performance remains overwhelmingly mixed, which
inspired us to make use of the data on Japanese listed firms to provide
additional empirical evidence.
2.2.2. Hypotheses
Based on our detailed review of the existing research concerning
female CEOs, both in Japan and internationally, we predict a positive
relation between female CEO and firm performance. The justification is
as follows. First, female CEOs of listed Japanese firms may possess
extraordinary skills as leaders and differ from the general population as
they have successfully broken through the glass ceiling. Those who can
overcome so many obstacles and such adversity in the male-dominated
corporate world to become a CEO of a listed firm, at least in the public
eye, must be game changers.
For their part, female heirs must also possess some talent in that this
may be why firm founders go against the tradition of male inheritance
by choosing and training female heirs to be the next CEO within a
carefully considered long-term plan. Second, the public and investors in
Japan could potentially appreciate female CEO representation because it
demonstrates the firm will select the right person for the job regardless
of gender. As many of the heirs and sarariwoman CEOs in our sample
were subject to the recommendation of the firm founder or selected by
the current board, the market may well perceive the chosen female CEO
as highly competent.
Based on these arguments, we predict that the performance of female
CEOs in Japan is positively associated with firm performance and set out
the following three hypotheses for testing.
Hypothesis 1: Female CEO representation is positively associated with
ROA.
Hypothesis 2: Female CEO representation is positively associated with
Tobin’s Q.
Hypothesis 3: The market reacts positively to the introduction of a
firm’s first female CEO.
3
Journal of The Japanese and International Economies 62 (2021) 101163
3. Data and methodology
We construct the database using several data sources in Japan. The
information on board and CEO gender is from the Yakuin Shikiho
(Directory of Directors) database published by Toyo Keizai, Inc. This
directory provides general information on female CEOs, including their
name, birthplace, education, working experience, gender, and age. The
firm-specific and financial information are from the Nikkei NEEDS
Corporate Governance Estimation System (Nikkei NEEDS CGES) and the
database of the Development Bank of Japan (DBJ). Information on stock
price and stock market index are from Astra Manager. Other important
data sources are company websites and Nikkei Value Search when we
research the date of appointment, profile, and introduction story for
each female CEO. We also refer to news, interviews, or available infor­
mation from Internet sources such as Wikipedia, Bloomberg, and Link­
edIn for other information relevant to female CEOs in Japan.
Our database comprises all nonfinancial listed firms with available
information on performance indicators, such as the return on assets
(ROA) and Tobin’s Q, from 2004 to 2015. The final data set for empirical
analysis consists of 41,879 firm-year observations, 320 of which have
female CEOs. In terms of firm identification, our database records 77
unique firms with female CEOs. However, in terms of head count, our
database records only 74 unique female CEOs, with three each leading
two different listed firms during the sample period.
For the empirical analysis, we employ two main dependent variables
representing female CEOs. The first is the female CEO dummy variable,
set equal to one if a female CEO runs the firm, and zero otherwise. The
second is the first female CEO dummy variable, set equal to one in the
year a firm appoints its first female CEO, and zero otherwise. We set
2004 as the base year, such that we consider any appointment of a fe­
male CEO for the first time since the initial firm listing as the first female
CEO.
To understand how a woman gets to the top position, we focus on the
background and origin of each female CEO in the sample and classify
them into one of three types: founder CEO, heir CEO, and sarariwoman
CEO. We then create the corresponding dummy variable for each type.
Following Adams et al. (2009) and Fahlenbrach (2009), we define
Founder female CEO as a dummy variable that equals one if any sources
explicitly mention that the current CEO is one of the original founders of
the firm or was CEO6 at the time of the founding of the company.
Heir female CEO is defined as a dummy variable that equals one if any
sources explicitly mention that the current CEO is a member of the
founding family (having no blood relation with the founding family is
acceptable where they married a relative of the founding family and
changed their family name). We specify Sarariwoman CEO as a dummy
variable taking a value of one if the female CEO is not a founder or
member of a founding family.
We construct several measures of firm-level performance. Following
the extant literature (Adams and Ferreira, 2009; Khan and Vieito, 2013;
Lam et al., 2013; Liu et al., 2014; Mehrotra et al., 2013; Saito, 2008), we
use ROA and Tobin’s Q to measure performance. Control variables for
firm and board characteristics include board size, outside director ratio,
female director ratio, CEO ownership ratio, CEO tenure, listing duration, total
assets, free cash flow ratio, leverage, foreign ownership ratio, and
entrenchment.
As a robustness check, we use several additional variables, including
ROE, volatility, R&D expenses, and M&A flag. For measuring stock
returns, following previous studies (Kolev, 2012; Tanaka, 2019), we use
cumulative abnormal returns (CARs) calculated using the standard
event study method. Appendix 1 provides the variable definitions and
details of the data sources.
6
There are two founder female CEOs of this type.
 K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

4. Empirical results

Notes: This table provides summary statistics for all variables. The sample consists of firms listed from 2004 to 2015, whose primary industry is not financial services. Appendix 1 details the definitions of all variables. *, **,
14.40***

13.48***

12.81***
13.83***
9.74***

8.67***

9.17***
4.90***
6.52***
6.20***

2.90***
statistic

2.02**
4.1. Basic statistics

–1.74
1.15

1.10

0.37

1.16

1.68
1.33
Z-

Table 1 presents the summary statistics of the main variables used in

18.15***

12.27***

13.33***
14.01***
8.90***

8.68***

3.02***
4.86***
5.99***
5.21***

4.16***
the analysis. These are for an unbalanced panel data for about 3,500
statistic

2.14**

2.39**
–0.28
1.37

0.50

0.64

0.16

1.17
firms each year, including all nonfinancial firms listed on several Jap­
t-

anese stock exchanges (Tokyo, Osaka, Nagoya, Fukuoka, and Sapporo),

Hercules, and JASDAQ from 2004 to 2015. The first column lists the
Median

26,434
17.00

51.17
variable names. The table also compares the basic statistics of firms
0.00

0.00
4.00

4.59
0.99

2.86
2.04
0.77
2.20
3.45

5.62
2.48
1.15
0
7

0
managed by female CEOs to those of firms managed by male CEOs and
provides the results of t-tests and Wilcoxon rank-sum tests of the dif­
1,003,813
Std. dev.

ferences in means.

389.87
14.59

19.94

10.85

24.99
47.76

12.55
16.01
11.48
0.28
5.09
8.51

1.39

1.26
3.19
0.31
75 On average, and as shown in Table 1, boards in Japan have eight
0
3

members in average, mostly inside directors. Outside directors make up

a much smaller share of the boardroom, roughly just 11%. In the same
196,119.80

vein, most board members are male, with female directors accounting
10.69

24.90

50.73
Mean

0.09
1.44
7.05

5.60
1.26

6.00

6.96
9.15
8.37

0.19
for only 1.48% of all board positions. Table 1 shows that only 9% of all
2.76
2.06
0.02
0
8

firm-year observations have at least one female director on the board.

Further, among the firm-year observations indicating female directors
41,559
41,559
41,558
41,559
41,559
41,559
41,559
41,458
41,290
41,132
41,458
37,042
41,302
37,711
41,071
41,497

41,169
37,787
22,188
38,092
Obs.

on the board, only 10.8% of boards have more than one female director.
The univariate comparison shows that firms run by female and male
CEOs differ substantially. Firms with female CEOs are often younger and
Median

12,404

39.59

12.23
15.49

smaller (lower total assets) but have better financial health (lower
0.00

0.00
4.00
8.00

6.37
1.17

2.55

2.84

6.51
2.57
0.89
1
6

leverage, higher ROA, and Tobin’s Q). Regarding board characteristics,

firms run by female CEOs have more female directors. Table 1 indicates
41,026.46
Std. dev.

that 9% of all firm-year observations have at least one female director.

15.08

11.75

11.61

16.98

21.76
28.43

16.01
19.78
15.23

46.49
0.42

6.73

1.85

1.57
1.29

Moreover, among firms run by female CEOs, 23% of firm-year obser­

16
0
2

vations7 have at least one female director on board, which is statistically

significantly higher than that for firms run by male CEOs (9%).
In addition, we provide detailed summary statistics for the boards of
directors in Appendix 2, thereby more fully describing the overall board
26,511.64
difference
Statistical

structure in our sample from 2004 to 2015. As shown in Appendix 2, we

11.81

11.20

43.43

16.84
21.88
Mean

0.23
6.74
6.03

8.58
1.73

7.43

8.78

3.83
3.09
1.31

have a total of 73 firm-year observations in our sample including both a

1
6

female CEO and female directors on the board. The number of firms with
at least one female director increased from 226 in 2004 to 593 in 2015.
Firms with male

In each year, the proportion of firms with female directors is higher for
firms with female CEOs than for firms with male CEOs. In addition, firms
run by female CEOs have a higher mean female director percent than
CEOs

those run by male CEOs in every year and this difference is statistically
Obs.

320
320
320
320
320
320
320
319
319
315
319
281
317
290
314
319

318
254
103
295

significant. This result is consistent with the idea that firms with female
directors are more likely to also have female CEOs.
Median

0.0000

26,236
17.00
0.00

0.00
4.00

4.60
0.99
51.1
2.86

0.79
2.24
3.45

5.63
2.48
1.15
7

4.2. Female CEOs in Japan

and *** denote significance at the 10%, 5%, and 1% level, respectively.

Japanese boards have long been considered to be a “boys’ club” and

Firms with female

Panel A of Table 2 gives empirical support for this contention. There is

an extremely unbalanced distribution of CEO gender in Japanese firms,
1,000,088
Std. dev.

as on average, there are only about 27 listed firms with female CEOs in
0.0871

388.40
14.60

19.92

10.91

24.97
47.64

12.61
16.08
11.51
CEOs

0.28
5.19
8.49

1.39

1.26
3.18
0.31

any one year, accounting for just 0.8% of firm-year observations. This
74
3

appears relatively stable throughout the sample period, despite recent

corporate governance reforms in Japan.
194,824.7

Panel A of Table 2 also provides a breakdown of female CEOs by

0.0076

10.70

24.79

50.68
Mean

0.09
1.48
7.04

5.62
1.26

6.01

7.03
9.24
8.37

0.22
2.76
2.06
0.02

type. We classify female CEOs into three types based on their back­
8

ground: founder, heir, or sarariwoman. The proportion of female CEO

firm-year observations is almost the same among the three types of fe­
41,879
41,879
41,878
41,879
41,879
41,879
41,879
41,777
41,609
41,447
41,777
37,323
41,619
38,001
41,385
41,816

41,487
38,041
22,291
38,387
firms

male CEOs, at about 33%. However, after combining founder and heir
Obs.
All

female CEOs, the proportion of female CEOs associated with family

business accounts for about 67% of total firm-year observations.
Outside director ratio (%)
Female director (dummy)
Female director ratio (%)

Total assets (million yen)

CEO ownership ratio (%)

Free cash flow ratio (%)

Foreign ownership ratio

Listing duration (years)

Regarding tenure, male CEOs have a mean tenure of 7.04 years while for
Sales growth ratio (%)
Female CEO (dummy)
Summary statistics.

female CEOs the mean tenure is 6.03 years. Among the three types of
CEO tenure (years)

R&D expenses (%)

Entrenchment (%)

female CEOs, founder female CEOs exhibit the longest average tenure of
Board size (n)

Volatility (%)
Leverage (%)
Tobin’s Q

M&A flag
Variables
Table 1

(%)
ROA

7
ROE

Of 74 unique firms with female CEOs, 25 (34%) have at least one female
director.

4
K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

Table 2
Distribution of CEO gender (2004–2015).
Panel A: Summary statistics of CEO gender by year (firm-year observations).
Total CEOs (n) Female CEOs (n) Proportion of female CEO (%) Breakdown of female CEO types
Founder (n) Heir (n) Sarariwoman (n)
All 41,879 320 108 105 107
2004 3,462 25 0.72 6 9 10
2005 3,557 27 0.76 9 9 9
2006 3,640 30 0.82 11 8 11
2007 3,721 27 0.73 11 10 6
2008 3,680 28 0.76 11 11 6
2009 3,565 27 0.76 12 9 6
2010 3,449 29 0.84 11 10 8
2011 3,388 25 0.74 7 8 10
2012 3,341 25 0.75 10 7 8
2013 3,328 25 0.75 8 9 8
2014 3,355 24 0.72 6 6 12
2015 3,393 28 0.83 6 9 13
Panel B: Generation of heir female CEOs in relation to firm founder (firm-year observations).
All heir female CEOs (n) First generation (n) Second generation (n) Third generation (person)
All 105 40 48 17
2004 9 3 4 2
2005 9 4 3 2
2006 8 4 2 2
2007 10 3 5 2
2008 11 4 5 2
2009 9 4 3 2
2010 10 3 5 2
2011 8 2 5 2
2012 7 3 4 0
2013 9 4 5 0
2014 6 3 3 0
2015 9 3 4 2

9 years, heir female CEOs have an average tenure of 5.7 years, and
sarariwoman CEOs have the shortest average tenure of just 3.4 years.
In terms of individual female CEOs, our database tracks the careers of
74 individual female CEOs that have either led or continue to lead 77
listed firms in Japan during the sample period. Several studies (Faccio
et al., 2016; Morikawa, 2016) of women on boards suggest that unlisted
firms are more likely than listed firms to have women on their boards.
For example, Faccio et al. (2016) used data from 18 countries and found
that the percentage of female CEOs in privately held firms was about
10.2%, compared with 7.2% among publicly traded firms. As we only
sample listed firms, this may account for the very small share of female
CEOs in our sample. Among the 77 firms with a female CEO, there were
37 where the female CEO was in that position prior to the firms’ initial
public offering and subsequent listing. The remaining 40 firms are where
an existing listed firm appointed a female CEO for the first time8 and
some later changed its first female CEO by another female during the
research period.
According to their background, of the 74 female CEOs in the sample
and in line with our classification, 21 are founders, 23 are heirs, and 30
are sarariwomen. In what follows, we analyze in detail each type of fe­
male CEO in Japan by focusing on the process of CEO appointment,
including the roadblocks faced along with the influence of the board,
especially the role of the preceding CEO in facilitating the appointment
of a female CEO.
4.2.1. Founder female CEOs
Analysis of the 21 founder CEOs reveals that many are leading fig­
ures in Japanese business, a record for Japanese female entrepreneurs.
For instance, one of the founder female CEOs is Japan’s first self-made
female billionaire, while another is the youngest woman in Japan to
have taken her company public, listing it on the Tokyo Stock Exchange
while she was still in her 20s. The female founder CEOs are also well
8
We identify 34 firms that shifted from a male CEO to a female CEO for the
first time.
educated, with 95% graduating from college or higher education, and
seven having either overseas working experience or a higher education.
Six CEOs have cofounders, typically their husbands. During their ca­
reers, many female founders have built their firm brand names as market
leaders in their chosen industry, including DeNA, Tempstaff, and Sakai
Moving Center.
As an example, Yoshiko Shinohara9 is a towering figure among
founder female CEOs in Japan. Shinohara founded Temp Holdings, a
temporary staffing company in 1973, making herself Japan’s first self-
made female billionaire in 201710. With a strong entrepreneurial
spirit, she often thinks outside the box. She started in business when
young, taking risks to pursue her career goals11; she was not reluctant to
go abroad for work or studies, nor did she hesitate to start up in a new
industry, and was ready to go global whenever the opportunity arose.
When asked whether she would have had an easier entrepreneurial life
as a man, she responded that the difficulty in undertaking start-ups was
the same for both genders.
4.2.2. Heir female CEOs
The appointment of 23 heir female CEOs highlights the seldom
practice for inheritance in Japanese business families, with some
choosing to transfer the role of CEO to their female heirs, either wife,
sister, daughter, or granddaughter, and even daughter-in-law or sister-
in-law. It is widely known that Japanese business families prefer their
sons to inherit the firm over their daughters, especially the coveted
position of CEO. For Japanese business families without a son, Hama­
bata (1991) has discussed “the burden of mockery” that daughters bear
9
https://hbr.org/2009/10/pioneering-entrepreneur-yoshiko-shinohara-on-
turning-temporary-work-into-big-business-in-japan.
10
It is often the case that female founders establish firms in those industries
most related to women.
11
She used to run into opposition from the Ministry of Labor as lifetime
employment was the norm in Japan, and temping by private companies was
banned under law. Having spent years lobbying alongside with other temping
firms, the law was eventually changed.

5
K. Kubo and T.T.P. Nguyen
in being forced to marry without love a man willing to give up his own
household surname in exchange for the CEO position in the future.
By contrast, our analysis focuses on the somewhat brighter side,
where female heirs take up their role as the born-to-be CEO of the family
firm. Panel B of Table 2 details the firm-year observations of female heir
CEOs by generation in relation to the firm founder. As shown, first-
generation heirs are the wives or sisters of founders. Our database re­
cords eight heirs of this type, six being wives of the firm founders, one a
sister of the founder, and one a sister-in-law of the founder. Second-
generation heirs account for most of the heir sample, with 11 female
CEOs, eight of whom are the biological (by blood) daughters of the
founders and three of whom are daughters-in-law. By comparison, there
are just four third-generation heir female CEOs, all granddaughters of
their firm’s founder.
The means of power transfer also differ among the three heir gen­
erations. The wives of founders often take the CEO position in abnormal
situations, such as where their founder-husband suddenly becomes ill or
dies. Several first-generation heirs appear to be only short-term place­
holders, appearing as CEOs but shortly being replaced by other family
members or outsiders. By contrast, the transfers of power for the second-
and third-generation female heir CEOs appear to reflect a more long-
term vision with careful planning. For example, there are several cases
where the founder had both female and male heirs but decided to award
the position of CEO to the eldest daughter or granddaughter. There are
also exceptional cases where the biological son resigns from an inherited
CEO position owing to ill health or interests in other activities, such as
politics, where the position of CEO then flows to their wife or sister.
As an example of a female heir CEO, Emiko Takemoto replaced her
father, the second CEO of Takemoto Yohki Co., Ltd., to run the family
firm founded by her grandfather some 70 years earlier. Being the eldest
of two sisters with a predetermined status in the firm, she was destined
through a long and carefully designed training course to become the
next CEO. Takemoto recalled that when young, she became accustomed
to talking with her grandfather about firm operations and finances and
was imbued with “the attitude of not running away” (in Japanese)12.
After several years of working outside the firm for a securities company,
she was invited to join the family business and thereafter was treated as
any other staff member. She began work in the factories before moving
to the company headquarters, and gathering sufficient knowledge about
the family business before being appointed to the board and eventually
the CEO-ship. All these processes help facilitate the smooth transfer
between generations in family-owned firms and potentially involve the
extensive influence of the board, including the chairman (her grandfa­
ther), the CEO (her father), and other board members.
In our analysis, we employ hand-collected information to investigate
how positions are inherited within the family. In the sample, there are
eight first-generation heirs, consisting of six wives and two younger
sisters of the founders. Four of these played the role as placeholders
when the founder resigned due to health problems. They then became
CEOs but remained on the board for less than two years before the
appointment of a new CEO. The remaining four first-generation heirs are
more active in that they are the wives of founders and have thus played a
role in the firm’s operations and management from its early days. When
their husbands became chairmen, they became CEOs and managed the
firms for several years. Later, they became chairwomen and helped
transfer the firm’s day-to-day management to their children or profes­
sional CEOs.
As for the second-generation heirs, there are 15 heir female CEOs,
comprising 11 daughters and 4 granddaughters in our sample. We find
that two of the heir female CEOs have no siblings, one has only a
younger sister, and the remaining 12 heir female CEOs have both male
and female siblings. Among the 12 heirs with siblings, we find a smooth
cooperation and transition among the siblings. In most cases, the elder
12
https://sogyotecho.jp/interview%E2%88%92takemoto/.
6
Journal of The Japanese and International Economies 62 (2021) 101163
sister became the CEO first and the others worked as directors. When she
eventually resigned and became chairwoman, the younger brother
typically became the CEO. As the practice of appointing female CEOs in
listed firms only appeared after the early 2000s, many heir female CEOs
remain as such throughout the entire sample period.
From our results, except for the fight over control at Otsuka Kagu,
there is no apparent conflict among the siblings of female CEOs for firm
control during our sample period. However, the account of the Otsuka
family also reveals that the founder made a choice in that he first chose
the elder son among five siblings as his successor. It was only later that
the founder chose his elder daughter to become the next CEO as he found
the elder son unsuitable for the top leadership position.
4.2.3. Sarariwoman CEOs
The third group represents sarariwomen, or female CEOs bearing no
apparent relation with the firm founder or the founding families. We
find 30 CEOs are sarariwomen, with most, especially the Japanese sar­
ariwomen, having worked for the firm since they were fresh graduates
before being gradually promoted to the top position after many years in
service. Six of the 30 sarariwomen are foreigners, heading the Japanese
division of large global corporations, including McDonalds, Toys “R” Us,
and Levi Strauss. These are often firm veterans with many years of
experience in the firm’s worldwide operations before being appointed as
the CEO.
A typical sarariwoman CEO begins working for a firm when young,
either as a full-time or even part-time employee, after the firm’s
inception. Mayumi Hashimoto, CEO of Bookoff Corporation, is an
outstanding example of a sarariwoman CEO. Bookoff is a pioneer second-
hand bookstore chain and Bookoff’s CEO and founder, Takashi Saka­
moto, distinguished his firm by training part-timers and motivating
them toward leadership positions, as illustrated by CEO Mayumi
Hashimoto. Hashimoto began working for Bookoff as a part-time
employee in 1990, one year later she became a regular employee, and
three years later she was promoted to an executive position. After 16
years working for Bookoff, she was appointed as CEO. Hashimoto ap­
preciates the rarity of being a female president of a listed Japanese firm,
and identifies hard work, imagination, hands-on management, and
thinking outside the box as the keys to her success. More importantly,
Hashimoto emphasizes that her success drew from the founder’s prin­
ciples and the firm’s culture: “I would never have been this successful if
not for Mr. Sakamoto and the working environment provided by
Bookoff. Every employee is given the same chance to succeed regardless
of their gender, age, or educational background”13.
4.3. The determinants of female CEOs
We use probit regressions to identify the determinants of a female
CEO. The dependent variable is female CEO dummy, which takes a value
of one if the firm has a female CEO and zero otherwise. Following pre­
vious studies (Adams et al., 2009; Morikawa, 2016; Saito, 2015; Tanaka,
2019; Westphal and Milton, 2000; Wolfers, 2006) and in line with the
descriptive statistics in Table 1, we specify several key independent
variables that help determine the presence of female CEOs. Following
Tanaka (2019), we lag all independent variables one period to mitigate
problems with reverse causality. For the board characteristics, we use
board size, being the total number of board members, the ratio of
outside to total directors and the ratio of female to total directors. For
the firm characteristics, we include listing duration, the log of total as­
sets as a proxy for firm size, leverage, the ratio of CEO ownership to total
ownership, the ratio of foreign to total ownership, and a measure of
entrenchment.
One of our main focuses is the proportion of female directors on
board. If there are existing female directors on a board, they may prefer
13
https://www.wsj.com/articles/SB115248150758501776.
K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

Table 3 Table 4
Determinants of female CEO. Effect of female CEOs on firm performance: OLS and fixed effects regressions.
Dependent variable = Female CEO Female CEO Female CEO (1) (2) (3) (4)
(1) (2) (3) Regression model OLS Fixed OLS Fixed effects
L.Board size –0.0433*** –0.0453*** –0.0433*** effects
(0.0126) (0.0125) (0.0126) Dependent variable ROA ROA Tobin’s Q Tobin’s Q
L.Outside director percent –0.000365 –0.000518 –0.000381 Female CEO 1.206 0.287 0.138 0.160
(0.00150) (0.00149) (0.00150) (1.707) (0.851) (0.225) (0.109)
L.Female director percent 0.0271*** 0.0281*** 0.0271*** Board size –0.0131 –0.00463 0.00981*** 0.00284
(0.00255) (0.00260) (0.00260) (0.0296) (0.0260) (0.00359) (0.00336)
L.Listing duration –0.0168*** –0.0162*** –0.0169*** Outside director –0.0347*** –0.0189*** 0.00474*** –0.00243***
(0.00276) (0.00268) (0.00276) ratio
L.Log (total assets) –0.00343 1.03e–05 –0.00348 (0.00914) (0.00507) (0.000911) (0.000655)
(0.0196) (0.0194) (0.0196) Female director 0.0354 0.0577*** 0.00223 0.00237
L.Leverage –0.00316*** –0.00286** –0.00316*** ratio
(0.00122) (0.00122) (0.00122) (0.0245) (0.0133) (0.00266) (0.00171)
L.CEO ownership 0.00569* 0.00531* 0.00569* Total assets (log) 0.617*** 3.104*** –0.169*** –0.828***
(0.00322) (0.00321) (0.00322) (0.157) (0.154) (0.0154) (0.0199)
L.Entrenchment –0.000808 –0.000656 –0.000807 Foreign ownership 0.115*** 0.0521*** 0.0217*** 0.0154***
(0.00175) (0.00175) (0.00175) ratio
L.Foreign ownership 0.00611** 0.00607** 0.00611** (0.0148) (0.00903) (0.00173) (0.00116)
(0.00238) (0.00236) (0.00238) CEO ownership 0.123*** 0.0437*** 0.00947*** 0.00337***
Womenomics 0.00653 –0.006 ratio
(0.0561) (0.0934) (0.0166) (0.00661) (0.00177) (0.000853)
Constant –1.835*** –1.858*** –1.814*** CEO tenure 0.0309*** 0.0212*** –0.00621*** –0.00195*
(0.177) (0.172) (0.185) (0.0107) (0.00809) (0.00116) (0.00105)
Industry fixed effects Yes Yes Yes Constant –2.834 –24.30*** 2.865*** 9.901***
Year fixed effects Yes No Yes (2.013) (1.915) (0.173) (0.247)
Observations 26,181 26,185 26,181 Observations 37,757 37,757 37,937 37,937
Pseudo R-squared 0.1301 0.1303 0.1301 R-squared 0.092 0.053 0.145 0.119
Industry dummies YES YES YES YES
Notes: This table provides probit regression estimates of the probability of a Year dummies YES YES YES YES
female CEO. The sample consists of firms listed from 2004 to 2015, whose pri­
mary industry is not financial services. All independent variables are lagged 1 Notes: The table provides OLS and fixed effects regression estimates of the effects
year except for the Womenomics dummy variable. Robust standard errors are in of female CEO on firm performance. The dependent variables as shown are ROA
parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% level, and Tobin’s Q. The independent variable of interest is female CEO dummy. All
respectively. regressions control for board and firm characteristics and industry and year
effects. Robust standard errors are in parentheses. *, **, and *** denote signif­
icance at the 10%, 5%, and 1% level, respectively.
to have CEO that are demographically similar (Cook and Glass, 2015;
Westphal and Milton, 2000). Consequently, we expect that the estimated
coefficient of the share of female directors will be positive. In terms of
the other variables, Morikawa (2016) finds that younger and smaller lagged independent variables whereas column 2 specifies contempora­
listed firms have a greater likelihood of a female CEO, while Wolfers neous independent variables. The regression results suggest the two key
(2006) notes that companies with female CEOs are smaller than those determinants of a firm’s first female CEO are female director percent and
with male CEOs. Therefore, we hypothesize that firms with a female listing duration. The coefficient of female director percent is significantly
CEO are both younger and smaller firms. Lastly, we expect the share of positive, suggesting that firms with more female directors are more
foreign ownership to have a positive relation with a female CEO in that likely to introduce their first female CEO. These results demonstrate the
foreign shareholders are generally less hesitant to appoint female CEOs positive influence of female directors on the likelihood of the firm
than local shareholders. appointing its first female CEO.
Column 1 in Table 3 presents the results of probit regression con­ Next, we test the effect of “Womenomics” policies on female CEO
trolling for industry14 and year effects. In general, the presence of female representation in Table 3. As mentioned earlier, this policy package
CEOs is positively related with the female director ratio, CEO ownership aimed to promote the active participation of women in the Japanese
ratio, foreign ownership ratio, and negatively related to board size, listing economy15, especially through increasing the number of women in
duration, and leverage, all displaying large t-statistics. leadership positions. To examine whether these policies have helped
Besides the examination of the determinants of female CEO in stimulate the appointment of female CEOs, following Nagase (2018), we
Table 3, we also evaluate the factors concerning the first introduction of create the dummy variable Womenomics. This dummy variable takes a
a female CEO. For this, we focus on 34 firms that appointed a female value of one for the 3 years when “Womenomics” policies have been in
CEO for the first time after the initial firm listing during the sample place (2013–2015), and zero otherwise. Column 2 in Table 3 shows the
period from 2004 to 2015. The dependent variable is a dummy variable results of the probit regression with the Womenomics variable included
for first female CEO, which takes a value of one for the year of the first and the year dummies excluded. We obtain similar results to those in
female CEO appointment and zero for all firm-years prior to the intro­ Column 1 for the main variables. Regarding the Womenomics dummy,
duction year. We remove firm-years subsequent to the first appointment the estimated coefficient is positive but not statistically significant. In
year. Column 3, we include the year dummies for 2004–2012 to control for
Appendix 3 provides the regression results. Column 1 employs the period before “Womenomics” and the coefficient for Womenomics
turns negative but remains not statistically significant. In addition, the

14
Regarding the impact of the utility firms, there are 28 unique firms of the
utility industry in our sample, making up 296 firm-year observations, roughly
0.7% of the total firm-year observations. However, no observations of female
CEO are recorded at these firms during our data period from 2004 to 2015.
When we exclude the firms in utility industry, we found the main results almost
unchanged except for the sample size.
15
Nagase (2018) also examined the effect of “Womenomics” policies and
identified a strong increase in the labor participation rate of mothers with
young children, with mothers remaining in permanent contract employment
with the provision of infant care and shorter parental working hours.

7
K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

Table 5 estimated coefficients are positive in both regressions, but again, not
Effect of female CEOs on firm performance: IV 2SLS regressions statistically significant. We cannot reject the null hypotheses at con­
(1) (2) (3) (4) ventional significance levels.
Regression model First-stage IV IV with First-stage IV IV with
with fixed fixed with fixed fixed effect 4.5. Female CEOs and firm performance: IV 2SLS estimator
effect effect effect
Dependent variable Female CEO ROA Female CEO Tobin’s Q
Female CEO -17.403 -14.299 Previous studies identify the problem of endogeneity in board
(65.949) (9.551) composition (Adams et al., 2009; Hermalin and Weisbach, 2003) and
Board size 0.000 -0.006 0.000 0.003 this is important as it potentially affects the robustness of the regression
(0.000) (0.030) (0.000) (0.004) results. Wintoki et al. (2012) argue that apart from the two most popular
Outside director 0.000*** -0.009 0.000*** -0.002**
ratio
sources of endogeneity (unobservable heterogeneity and simultaneity),
(0.000) (0.008) (0.000) (0.001) there is another potential source arising from the possibility that the
Female director -0.001*** 0.058 -0.001*** -0.007 current values of the governance variables are a function of past firm
ratio performance. Table 3 shows that the presence of female CEOs is
(0.000) (0.051) (0.000) (0.008)
significantly associated with the firm’s past characteristics, suggesting
Total assets (log) 0.001 2.882*** 0.001* -0.867***
(0.001) (0.190) (0.001) (0.029) that we should treat female CEOs, at least in part, as an endogenous
Foreign ownership 0.000 0.065*** 0.000 0.019*** outcome. Following the existing literature (Adams et al., 2009; Adams
ratio and Ferreira, 2009), we use an instrumental variable (IV)17 two-stage
(0.000) (0.011) (0.000) (0.002) least squares (2SLS) model to address this endogeneity problem. Also
CEO ownership -0.000** 0.032*** -0.000** 0.001
ratio
following previous studies (Adams and Ferreira, 2009; Estelyi and
(0.000) (0.009) (0.000) (0.001) Nisar, 2016; Miletkov et al., 2016), we specify the total number of the
CEO tenure -0.000*** 0.011 -0.000*** -0.005** firm’s male directors sitting on other boards with at least one female
(0.000) (0.015) (0.000) (0.002) director as the instrumental variable. The assumption is that this IV
The proportion of -0.017*** -0.018***
reflects the social network of board members in that male directors with
male directors with
female board larger social networks including female board members can potentially
connection support and promote the introduction of a female CEO to a board. We
(0.005) (0.005) suggest this IV exhibits no direct relation with firm performance.
Observations 32,786 32,786 32,962 32,962 Table 5 provides the results of the IV 2SLS regressions. The depen­
R-squared 0.045 -0.112
dent variables are ROA and Tobin’s Q and the control variables are
Industry dummies YES YES YES YES
Year dummies YES YES YES YES identical to those in Table 4. In Columns 1 and 3, we report the results of
the first stage of the instrumental variable regression in which the pro­
Notes: The table provides IV 2SLS regression estimates of the effects of female
portion of male directors with female board connections serves as the
CEO on firm performance. Robust standard errors are in parentheses. *, **, and
instrument for the Female CEO dummy.
*** denote significance at the 10%, 5%, and 1% level, respectively.
Columns 2 and 4 in Table 5 report the main results of the IV esti­
mations. The estimated coefficients for the dummy variable Female CEO
are negative in relation to ROA and Tobin’s Q, but not statistically sig­
coefficient for Womenomics is not significant when the dependent vari­ nificant. Overall, we find that the presence of female CEOs is not asso­
able is Sarariwoman. The results in Table 3 thus indicate no “Wom­ ciated with firm performance using the results of the IV 2SLS
enomics” effect in our sample period, at least concerning female CEOs. regressions. We cannot reject the null hypotheses for Hypothesis 1 and
Hypothesis 2 at conventional significance levels.
4.4. Female CEO and firm performance: OLS and fixed effect regressions
4.6. PSM DiD estimator
In this section, we measure the effects of female CEOs on firm per­
In this section, we employ a DiD approach to reexamine the perfor­
formance using OLS with robust16 standard errors clustered at the firm
mance effects of a female CEO because this could help mitigate some of
level and fixed effects regressions. The dependent variables are ROA and
several known types of bias in corporate governance research (Adams,
Tobin’s Q. We specify female CEO dummy as the independent variable of
2017; Hermalin and Weisbach, 2017). We focus on the performance
interest. We also control for board and firm characteristics by including
change in firms introducing a female CEO for the first time by comparing
board size, outside director ratio, female director ratio, total assets (log
the change in performance around the introduction of the first female
form), foreign ownership ratio, CEO ownership ratio, and CEO tenure as
CEO with that of other firms in the same period. If firms with a female
control variables. Following Adams (2016), we use firm fixed effects
CEO are more likely to improve firm performance, we may be able to
regression to address potential omitted variable bias caused by factors
observe a large performance increase around the introduction of a new
such as corporate culture and workplace practices.
CEO. Given that we compare these changes at a certain point in time, we
Columns 1 and 2 in Table 4 present the OLS and fixed effects
can exclude the effects of firm-specific factors that are time-invariant.
regression estimates of the effects of a female CEO on ROA. The co­
We use the data set for 34 firms that appointed a female CEO for the
efficients for female CEO dummy are positive in both the OLS and fixed
first time since the initial firm listing during the period from 2004 to
effect regressions, but not statistically significant. Columns 3 and 4 in
2015. To investigate performance change around the introduction of a
Table 4 provide the regression estimates of the effects of female CEO on
first female CEO, we compare the following performance windows: (–1,
Tobin’s Q. We find similar results to ROA in that the signs of the
1), (0, 1), and (0, 2) where Year 0 is the year when a firm first introduced
a female CEO.
16 One problem in estimating the effect of a female CEO on performance
In all regressions in this study, we use robust option where applicable to
reduce the influence of very large residuals and attenuate the outlier effects. In
is the confounding effects of the differences in firm characteristics of
addition, we have double checked by winsorizing all main variables at 1% and firms managed by female and male CEOs. To address this, we apply a
99% levels for each year to control for the effects of potential outliers. In
general, we found the main findings unchanged, very few results become less
17
significant. We thank an anonymous reviewer for this suggestion.

8
K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

Table 6 Q. The DiD result for the outcome of ROA shows that the coefficients of
Effect of the introduction of a female CEO on firm performance: PSM DiD the three windows associated with the interaction are negative, but not
approach. statistically significant. By contrast, the effects for Tobin’s Q are mixed,
Panel A: DiD estimation results. with positive coefficients for windows (–1, 1) and (0, 1) and a negative
ROA Tobin’s coefficient for window (0, 2), but again not statistically significant.
Q In short, using PSM DiD estimation, we obtain no empirical evidence
Year window Treated: DiD Robust std. DID Robust
about differences in the change in performance outcomes between firms
control error std. error
obs. that introduced their first female CEO and their corresponding control
(–1, +1) 26:26 –3.713 (7.342) 0.300 (1.203) firms. However, as discussed, we face a sample size limitation when
(0, +1) 26:26 –0.168 (8.355) 0.397 (0.856) carrying out the PSM DiD analysis. In addition, the sample period is
(0, +2) 14:14 (7.143) (0.575)
–6.937 –0.336
rather short and we cannot readily observe the results for longer win­
Panel B: Mean ex post firm characteristics: Treated vs. control firms.
Treated Control Statistical
dows using the current data set. As it may take several years for newly
group group difference appointed female CEOs to impact firm performance, research in the
Variables Mean Mean t-statistic future could extend the sample and windows when suitable data become
Board size 6.85 6.50 0.49 available.
Outside director 13.27 10.38 0.72
ratio (%)
Female director 7.39 8.79 0.44 4.7. Female CEO and firm performance: Event studies
ratio (%)
Listing duration 8.08 8.92 0.50
In this subsection, we use an event study methodology to measure
(year)
Total assets (log 9.68 10.18 1.12 the effects of female CEOs on stock returns. More specifically, we search
form) for abnormal stock returns surrounding the announcement of a firm’s
Leverage (%) 43.76 43.60 0.02 first female CEO appointment.
CEO ownership 9.74 10.57 0.21 The event study adds value to the literature by examining the impact
(%)
Entrenchment 17.45 12.55 0.99
of female CEOs from the shareholder’s point of view20. Our data range is
(%) from 2004 to 2015 and any introduction of a female CEO for the first
Foreign 11.22 17.49 1.13 time since the firm listed serves as the appointment event. The event
ownership (%) date is the announcement date21 of the female CEO succession. We
Notes: This table provides the results of DiD estimations. The introduction of the identify the exact date for this using the announcement release on Nikkei
first female CEO during the period 2005 to 2014 is treated as a type of shock with Value Search and then verify the information using each firm’s home­
firms experiencing shock denoted treated firms. For each treated firm, we find a page. To ensure that the female CEO appointed during our data period is
matched control firm with similar firm characteristics using the PSM method. the first since the firm listed, we carefully checked the history of each
We apply matching without replacement and each treated firm and its matched firm to verify its listing date as well as identifying the gender of all
control must be in the same industry in the same year. Robust standard errors are previous CEOs using the Yakuin Shikiho database.
in parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% level,
Overall, our database records that 34 firms appointed a female CEO
respectively.
for the first time during the period 2004–2015. Of these, 21 (63%) of
first-time female CEOs are sarariwomen22. The remaining 13 female
CEOs are associated with family firms, nine of whom are the heirs of
PSM method to construct an appropriate control group based on founders and four of whom are cofounders.
observable firm characteristics for the treatment group (firms with a We use the market model to measure CARs over five event windows
female CEO) and the control group (firms with a male CEO). The pro­ [–1, +1], [–2 +2], [–3, +3], [–4, +4], and [–5, +5]. We use Astra
pensity score is the conditional probability of treatment assignment, Manager to obtain the adjusted closing stock prices for each firm around
here being the probability of appointing a first female CEO (Heckman the announcement event, including 170 days before and 5 days after the
et al., 1997; Heckman et al., 1998; Rosenbaum and Rubin, 1983; CEO appointment announcement. The estimation window is defined as
Rosenbaum and Rubin, 1985). We calculate the propensity score using 170 to 20 days before the first female CEO introduction announcement,
the results in column 2 of Appendix 3 and create the control group by or a (–170, –20) day window. The return on the Tokyo Stock Exchange
matching the treatment and control firms18. TOPIX index serves as the market return.
Table 6 presents the PSM DiD estimation results. We have 26 trea­ Table 7 summarizes the results of the market reactions to the
ted–control firm pairs for windows (–1, 1) and (0, 1) and 14 trea­ announcement of the first female CEO appointment. Panel A presents
ted–control firm pairs for window (0, 2)19. In Panel B, we present a the mean and median CARs for all 34 introduction events. The mean
comparison of the ex post firm characteristics for the treated and control CARs over the [–1, +1], [–3, +3], [–4, +4], and [–5, +5] windows are
firms. The mean comparison suggests that the two groups are well
matched because there are no statistically significant differences with
20
any of the variables. Lee and James (2007) examined CEO announcements in the US, including
17 female CEO appointments, and found the CARs for female CEO appoint­
In Panel A, we present the results for the changes in ROA and Tobin’s
ments to be smaller. In their analysis, Brinkhuis and Scholtens (2018) used an
international sample of 100 announcements of female appointments across 15
countries in 2004–2014 and 100 matched announcements of male
18
For each treated firm, we identify one matched control firm with similar appointments.
21
firm characteristics having the closest propensity score in the same industry in Regarding the potential for confounding events around the appointment of
the same year. We also specify matching without replacement, meaning that a firm’s first female CEO, such as M&A or profit announcements, which can also
each control firm serves as a match for a treated firm only once. affect stock returns, we identify no corresponding M&A activity. While there
19
To measure the changes from year to year, we require parallel data for both are three first female CEOs appointed after the firm announced large net losses,
the treated firm and its matched control firm. However, some firms fell out of there is always a long time interval between the two events. For example, the
our sample. Several firms delisted after the appointment of their first female profit announcements are made in March, which is the fiscal year-end, whereas
CEO; some quickly replaced their first female CEOs in the following year; and the news of the CEO appointment is released in May. Therefore, we include all
others only appointed their first female CEO very recently (for example in 2014 34 recorded first female CEO appointments in our event study.
22
or 2015, such that the firm data in later years are out of our sample period). Of these, four are foreign female CEOs.

9
K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

Table 7
Cumulative abnormal returns (CARs) for the announcement of the first female CEO.
Window Mean CAR t-statistic for mean Median CAR Number of positive: Sign test for median CAR (p-
(%) CAR (%) negative value)
Panel A: Introductionof female CEO (34 events)
[–1, +1] 1.88 1.77* 0.67 21:13 0.230
[–2, +2] 1.72 1.48 0.68 22:12 0.121
[–3, +3] 2.79 2.47** 1.45 23:11 0.0576*
[–4, +4] 2.67 2.11** 1.37 23:11 0.0576*
[–5, +5] 4.13 3.01*** 2.63 25:09 0.009***
Panel B: Introduction ofsarariwomanCEO (21
events)
[–1, +1] 1.01 0.78 0.66 12:09 0.664
[–2, +2] 1.27 0.76 0.19 12:09 0.664
[–3, +3] 3.54 2.36** 2.28 15:06 0.078*
[–4, +4] 4.39 2.94*** 1.31 15:06 0.078*
[–5, +5] 6.25 3.52*** 4.01 16:05 0.027**
Panel C: Introduction of family female CEO(13
events)
[–1, +1] 3.29 1.79* 1.10 09:04 0.267
[–2, +2] 2.45 1.65 1.04 10:03 0.092*
[–3, +3] 1.58 0.92 0.72 08:05 0.581
[–4, +4] -0.12 0.05 2.35 08:05 0.581
[–5, +5] 0.71 0.38 0.55 09:04 0.267

Notes: This table provides the CARs for the introduction of the first female CEO for all firms from 2004 to 2015. Market model CARs were computed using days –170 to
–20 as the estimation period for the market model parameters. *, **, and *** denote significance at the 10%, 5%, and 1% level, respectively.

1.88%, 2.79%, 2.67%, and 4.13%, respectively, and all are statically
significantly different from zero. Similarly, the median CARs over the
[–3, +3], [–4, +4], and [–5, +5] windows are also positive and statis­
tically significant. These results provide support for Hypothesis 3. The
mean and median CARs for the [–2, +2] window are positive, but not
statistically significant.
In addition, we divide the announcements of first female CEO ap­
pointments into two groups: those for sarariwoman CEOs and those for
family female CEOs. Panel B details the results of the market reactions to
the announcement of the 21 first sarariwoman CEO appointments. The
mean CARs over the [–3, +3], [–4, +4], and [–5, +5] windows are
3.54%, 4.39%, and 6.25%, respectively, and strongly statistically sig­
nificant. Similarly, the median CARs over the [–3, +3], [–4, +4], and
[–5, +5] windows are also positive and statistically significant. The
mean and median CARs for the [–1, +1] and [–2, +2] windows are
positive, but not statistically significant. Panel C provides the results of
the market reactions to the announcement of the 13 family female CEO
appointments. As shown, most of the mean and median CARs over the
five windows are positive, but not statistically significant, except for the
mean CAR for the [–1, +1] window and the median CAR for the [–2, +2]
window.
There are several explanations for the positive CARs in Table 7. First,
the positive CARs seem to arise from the appointment of sarariwoman
CEOs, possibly because they have successfully broken through the glass
ceiling preventing the promotion of women to the highest positions in
firms (Adams and Funk, 2012; Kanter, 1977; Matsa and Miller, 2011;
Morisson et al., 1987). Those successfully promoted to top leadership
positions may also have a particular set of skills needed for promotion
within the organization that are not required for founding family
members. In other words, for sarariwoman CEOs, investors highly value
their abilities and skills and what they have accomplished in the past to
be promoted to the top position. This builds positive expectations of a
firm’s future from the current CEO’s profile (Berger et al., 1980;
Brinkhuis and Scholtens, 2018; Bunderson, 2003).
Second, the appointment of first female CEOs by listed firms is only a
comparatively recent occurrence in line with recent corporate gover­
nance reforms calling for the empowerment of woman in the workplace
and in top leadership positions. In evidence, in the firm samples in Saito
(2008) and Mehrotra et al. (2013) covering the period in Japan from
1959 to 2000, there are almost no female CEOs. It could then be the case
that shareholders regard firms with female CEOs as having better
corporate governance practices, better opportunities for sustainable
development, and enhanced prospects for firm survival (Faccio et al.,
2016). Finally, given the existing paucity of women on boards in Japan,
the appointment of a female CEO by a listed firm is an incredibly unique
event, and this may cause shareholders to react more strongly to an­
nouncements concerning their appointment (Lee and James, 2007).
5. Additional analyses and robustness check
5.1. Female CEOs and firm performance: Effects of different female CEO
types
In this section, we examine whether there are differences in perfor­
mance effects among the various types of female CEOs, i.e., founders,
heirs, and sarariwomen. Previous studies have reported a significant
difference in performance among firms managed by founders, those
managed by founder family members, and others (Anderson and Reeb,
2003; Faccio and Lang, 2002; Mehrotra et al., 2013; Saito, 2008; Vil­
lalonga and Amit, 2006). In addition, and as shown in Section 4.2, there
is a significant difference in characteristics among the female CEOs of
each type. Therefore, we examine the effects of different types of female
CEOs on firm performance.
For consistency in the performance comparison, we also separate
male CEOs23 into three similar subgroups, quasi-founder male CEOs,
quasi-heir male CEOs, and quasi-sarariman CEOs, with three corre­
sponding variables24. In our research, founder female CEO has a mean
share ownership ratio of 23.96%, heir female CEO has a mean ownership
ratio of 14.7%, and sarariwoman CEO has a mean CEO ownership ratio of
11.58%. Based on the share ownership ratio, we define quasi-founder
male CEO as a dummy variable equal to one if a male CEO has a share
23
We thank an anonymous reviewer for this suggestion.
24
It is not possible to confirm the background of every male CEO. Instead, we
classify male CEOs according to their share ownership when comparing them
with female CEOs. It can also be the case that a founder male CEO may not
actually be the founder.

10
K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

Table 8 Table 9
Effects of different types of female CEOs on firm performance. Female CEO and firm behavior.
(1) (2) (3) (4) (1) (2) (3) (4)
Regression model OLS Fixed effect OLS Fixed effect Regression Fixed effects Fixed effects Fixed effects Fixed effects
Dependent variable ROA ROA Tobin’s Q Tobin’s Q model
Founder female CEO 1.078 -0.239 0.404 0.569*** Dependent Leverage Volatility R&D M&A flag
(3.166) (1.526) (0.549) (0.194) variable expenses
Heir female CEO 0.413 1.314 0.0757 0.00325 Female CEO –3.182*** –0.0649 –2.444*** –0.000469
(0.948) (1.627) (0.141) (0.209) (1.019) (0.0830) (0.480) (0.0372)
Sarariwoman CEO 3.018 -0.575 0.198 0.0125 Total assets (log) 1.543*** –0.564*** –1.541*** 0.0106
(3.756) (1.271) (0.362) (0.164) (0.185) (0.0150) (0.0651) (0.00675)
Quasi-Founder male 0.434 -0.0315 0.166** 0.00814 ROA –0.310*** 0.00652*** –0.0560*** –0.000285
CEO (0.00724) (0.000595) (0.00250) (0.000264)
(0.897) (0.320) (0.0819) (0.0412) Sale growth ratio 0.0119*** 0.000397*** 0.00142*** 0.000249***
Quasi-Sarariman CEO 0.346 -0.316 0.0824 0.0585* (%)
(0.673) (0.259) (0.0601) (0.0335) (0.00115) (8.85e–05) (0.000401) (4.19e–05)
Board size -0.0142 -0.00458 0.00959*** 0.00279 Free cash flow –0.00425*** 9.42e–05** –0.000107 3.61e–05
(0.0294) (0.0260) (0.00358) (0.00336) (%)
Outside director ratio -0.0350*** -0.0188*** 0.00466*** -0.00244*** (0.000625) (4.65e–05) (0.00130) (2.28e–05)
(0.00913) (0.00508) (0.000909) (0.000655) CEO ownership –0.0489*** 8.04e–06 0.00893** –0.000607**
Female director ratio 0.0348 0.0575*** 0.00218 0.00262 ratio
(0.0244) (0.0133) (0.00265) (0.00171) (0.00789) (0.000774) (0.00365) (0.000288)
Total assets (log) 0.615*** 3.100*** -0.170*** -0.827*** CEO tenure –0.0220** –0.00304*** 0.00526* 6.48e–06
(0.157) (0.154) (0.0154) (0.0199) (0.00954) (0.000712) (0.00280) (0.000348)
Foreign ownership 0.115*** 0.0522*** 0.0217*** 0.0154*** Listing duration 2.131 0.0766 0.251 0.00691
ratio (year)
(0.0149) (0.00903) (0.00174) (0.00116) (1.604) (0.116) (1.025) (0.0585)
CEO ownership ratio 0.123*** 0.0383*** 0.00811** 0.00427*** Constant –30.93 5.459 14.37 –0.248
(0.0444) (0.00929) (0.00375) (0.00120) (49.48) (3.727) (37.35) (1.806)
CEO tenure 0.0324*** 0.0207** -0.00584*** -0.00191* Observations 37,142 34,900 20,074 37,142
(0.0104) (0.00811) (0.00112) (0.00105) R-squared 0.080 0.183 0.081 0.005
Constant -5.909 -25.22*** 2.847*** 10.02*** Industry YES YES YES YES
(3.656) (4.594) (0.647) (0.594) dummies
Observations 37,761 37,761 37,941 37,941 Year dummies YES YES YES YES
R-squared 0.092 0.053 0.145 0.119
Industry dummies YES YES YES YES Notes: This table shows the relation between female CEO representation and firm
Year dummies YES YES YES YES behavior. We use fixed effects regression in which the independent variable is
the female CEO dummy variable. The dependent variables consist of leverage,
Notes: This table provides the results of OLS and fixed effect regressions for the volatility, R&D expenses, and M&A flag, which are considered measures of firm
three female CEO groups: founder, heir, and sarariwomen. All regressions control risk-avoidance behavior. Robust standard errors are in parentheses. *, **, and
for industry and year effects. Robust standard errors are in parentheses. *, **, *** denote significance at the 10%, 5%, and 1% level, respectively.
and *** denote significance at the 10%, 5%, and 1% level, respectively.

(Abebe et al., 2020; Adams et al., 2009; Begley, 1995; Fahlenbrach,

ownership ratio greater than 23%25 and zero otherwise. We define
quasi-sarariman CEO as a dummy variable equal to one if the male CEO
has an ownership ratio smaller than 12% and zero otherwise. The
remaining male CEOs comprise the group of quasi-heir male CEOs.
Table 8 provides the results of OLS and fixed effects regressions for
founders, heirs, and sarariwoman CEOs.
The coefficient for founder CEO is positive and significant at the 1%
level in the fixed effects regression for Tobin’s Q. This suggests that firms
led by founder female CEOs have a Tobin’s Q that is 0.54 higher than
other firms. The estimated coefficients for heir female CEOs and sar­
ariwoman CEOs are not statistically significant.
We present several explanations for the positive and significant co­
efficients for founder female CEOs. First, founder female CEOs are also
founders. Existing studies emphasize that firms managed by founders
often outperform other firms (Adams et al., 2009; Begley, 1995; Fah­
lenbrach, 2009; He, 2008; Mehrotra et al., 2013; Saito, 2008; Villalonga
and Amit, 2006). In addition, a founder female CEO is likely to have
valuable industry- and firm-specific knowledge, skills, and abilities
25
Saito (2008) used data for 1,818 listed firms from 1990 to 1998 and found
that firms managed by founders have a family ownership ratio of about 18%,
while those managed by descendants have ownership ratios of about 12%.
Mehrotra et al. (2013) used data on 1,367 nonfinancial firms from 1949 to 2000
and found that firms managed by founder CEOs have a family ownership ratio
of 16.3%, whereas those managed by an heir CEO have a family ownership ratio
of 13%–15%. When we change the definition of quasi-founder male CEO by
using a cutoff share ownership ratio of 16% or 18%, the results in Table 8 are
unchanged in terms of the signs of the coefficients, but the magnitudes of the
coefficients are slightly smaller.
2009; He, 2008). In our sample, several founder female CEOs initiated
new business sectors relating to female customers or female labor uti­
lization, such as temporary staffing, cosmetics, and services.
More notably, it is likely that founder female CEOs possess a higher
intrinsic motivation because they regard the firm as their lifetime
achievement. It is an arduous task, especially for women in Japan, to
create a start-up firm when young and overcome the various challenges
to bring the firm to the position of being listed (Mehrotra et al., 2013).
Several female founders demonstrate their leadership even in industries
where male CEOs dominated by turning their firms into major industry
players, such as DeNA, Sakai Moving Service Co. Ltd., and JAC Group.
5.2. Female CEOs and firm behavior
The difference in performance between female- and male-led firms
could potentially be the result of differences in their behaviors. In this
section, we go a step further to check whether there are differences
between firms run by female vs. male CEOs in terms of behavior. This is
because one reason why we may fail to find a significant difference in
performance between female and male CEO firms is that there is so little
difference in behavior, such as risk-taking.
Past studies document that the behavioral characteristics of CEOs
play an important role in corporate policy decision-making (Habib and
Hossain, 2013; Skała, 2008). For example, Huang and Kisgen (2013)
reported that the propensity to make acquisitions is lower in companies
with female CEOs, while Faccio et al. (2016) argued that firms run by
female CEOs typically have lower leverage and less volatile earnings.
Because of risk-avoidance, firms run by female CEOs may also suffer
from capital inefficient allocation, but also have a greater chance of

11
K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

Table 10 Table 11
Different types of Female CEOs and firm behavior. Effect of female CEOs on ROE: OLS and fixed effects regressions.
(1) (2) (3) (4) (1) (2) (3) (4)
Regression model Fixed effects Fixed effects Fixed effects Fixed effects Regression model OLS Fixed effects OLS Fixed effects
Dependent Leverage Volatility R&D M&A flag Dependent variable ROE ROE ROE ROE
variable expenses Female CEO 2.372 21.63
Founder female -3.796** -0.0875 -1.146 0.000722 (4.072) (18.65)
CEO Founder female CEO –1.294 13.193
(1.832) (0.146) (1.234) (0.0669) (6.816) (34.048)
Heir female CEO -6.191*** -0.395** -0.282 0.00541 Heir female CEO 4.014 72.353**
(1.954) (0.154) (0.796) (0.0713) (3.820) (36.627)
Sarariwoman CEO -0.765 0.163 -4.031*** 0.0104 Sarariwoman CEO 2.816 –10.586
(1.545) (0.128) (0.633) (0.0564) (8.379) (28.431)
Quasi-Founder 0.711* 0.0650* 0.187 0.00383 Quasi-founder male CEO –1.575 –5.112
male CEO (2.560) (7.507)
(0.381) (0.0347) (0.151) (0.0139) Quasi-Sarariman CEO 0.215 –2.758
Quasi-Sarariman -0.224 -0.0322 -0.0210 0.0106 (2.750) (6.847)
CEO Board size 0.208 0.690 0.204 0.677
(0.309) (0.0270) (0.114) (0.0113) (0.394) (0.576) (0.393) (0.576)
Total assets (log) 1.550*** -0.563*** -1.531*** 0.0106 Outside director ratio –0.0474 0.0736 –0.047 0.072
(0.185) (0.0151) (0.0652) (0.00676) (0.0558) (0.113) (0.056) (0.113)
ROA -0.310*** 0.00653*** -0.0563*** -0.000282 Female director ratio –0.212 –0.0399 –0.210 –0.026
(0.00724) (0.000595) (0.00250) (0.000264) (0.325) (0.295) (0.321) (0.296)
Sale growth ratio 0.0119*** 0.000397*** 0.00143*** 0.000249*** Total assets (log) 5.146*** 27.33*** 5.146*** 27.333***
(%) (1.323) (3.454) (1.321) (3.455)
(0.00115) (8.85e-05) (0.000400) (4.20e-05) Foreign ownership ratio –0.126 0.00553 –0.126 0.001
Free cash flow -0.00424*** 9.48e-05** -4.61e-05 3.61e-05 (0.104) (0.201) (0.104) (0.201)
(%) CEO ownership ratio 0.408*** 0.517*** 0.451*** 0.557***
(0.000625) (4.65e-05) (0.00130) (2.28e-05) (0.0782) (0.147) (0.144) (0.191)
CEO ownership -0.0641*** -0.00235* 0.00449 -0.000468 CEO tenure 0.159*** 0.205 0.161*** 0.209
ratio (0.0570) (0.179) (0.056) (0.179)
(0.0111) (0.00138) (0.00597) (0.000404) Observations 37,657 37,657 37,657 37,657
CEO tenure -0.0220** -0.00300*** 0.00532* 3.11e-05 R-squared 0.004 0.021 0.004 0.021
(0.00957) (0.000715) (0.00280) (0.000349) Industry dummies YES YES YES YES
Listing duration 2.121 0.0758 0.249 0.00709 Year dummies YES YES YES YES
(year)
(1.604) (0.116) (1.024) (0.0585) Notes: The table provides OLS and fixed effects regression estimates of the effects
Constant -30.45 5.509 14.39 -0.263 of female CEO on firm performance. The dependent variable is ROE. The inde­
(49.48) (3.727) (37.33) (1.806) pendent variable of interest is female CEO, founder female CEO, heir female CEO
Observations 37,142 34,900 20,074 37,142 and sarariwoman CEO dummies. All regressions control for board and firm
R-squared 0.080 0.183 0.082 0.005 characteristics and industry and year effects. Robust standard errors are in pa­
Industry YES YES YES YES rentheses. *, **, and *** denote significance at the 10%, 5%, and 1% level,
dummies respectively.
Year dummies YES YES YES YES

Notes: This table shows the relation between different female CEO types and firm and Kisgen, 2013; Levi et al., 2014) that show that female CEOs are less
behavior. The dependent variables consist of leverage, volatility, R&D expenses,
risk-taking than their male counterparts. We explain such risk-averse
and M&A flag, which are considered measures of firm risk-avoidance behavior.
behavior as resulting from innate gender differences (Bertrand, 2011)
Robust standard errors are in parentheses. *, **, and *** denote significance at
and less overconfidence (Malmendier et al., 2011). We find that firms
the 10%, 5%, and 1% level, respectively.
run by female CEOs in our sample are less leveraged and have less
volatile earnings. Although all four measures negatively relate to the
survival than firms run by male CEOs (Faccio et al., 2016).
presence of female CEOs, we find that only the impact of female CEOs on
We examine this risk-avoidance behavior using our data set to clarify
leverage and R&D expenditure is statistically significant. To understand
whether there are differences in firm behaviors for firms run by female
why female CEOs have a different impact on diverse firm behaviors, we
CEOs. Following Faccio et al. (2016), we run fixed effects regression on
examine the relation between different types of female CEOs and firm
several measures of risk-taking, including leverage, volatility, R&D ex­
behavior.
penses, and M&A flag. The independent variable is Female CEO dummy.
Similar to Table 9, we run fixed effects regressions on four risk-taking
Following Faccio et al. (2016), we also include additional determinants
measures, leverage, volatility, R&D expenses, and M&A flag. The inde­
of risk-taking in the regression.
pendent variables of interest are founder female CEO, heir female CEO,
Table 9 presents the results of four regressions. Leverage is the
and Sarariwoman CEO. We also include the set of controllable variables
dependent variable in regression (1); Volatility, R&D expenses, and M&A
as in Table 9 and add two new control variables for male CEOs, quasi-
flag are the dependent variables in regressions (2), (3), and (4),
founder male CEO and quasi-sarariman CEO. Table 10 presents the results
respectively. The coefficient for Female CEO indicates that the leverage
of the regressions.
of firms run by female CEOs is some 3.18 percentage points lower than
Some coefficients for the different types of female CEOs are negative
the leverage of firms run by male CEOs; this coefficient is significant at
and significant, particularly for heir CEOs. In detail, the estimated co­
the 1% level. Similarly, the estimated coefficient for Female CEO on R&D
efficient for Founder female CEO on leverage is negative and significant.
expenses is negative and significant at the 1% level, implying that the
The estimated coefficients for Heir female CEO on Leverage and Volatility
cost of R&D investment for firms run by female CEOs is 2.44 percentage
are negative and significant at the 1% and 5% levels, respectively.
points lower than that of firms run by male CEOs. Regarding return
Regarding Sarariwoman CEO, the coefficient for R&D expenses is nega­
volatility and M&A activities, the coefficients for Volatility and M&A flag
tive and significant at the 1% level. In addition, firms run by Sarari­
are also negative, but not significant.
women CEOs tend to spend less on R&D.
The finding that female CEO exhibits a negative relation with
This could explain why we identify significant differences in per­
leverage, earning volatility, R&D expenditure, and M&A activities is
formance between firms managed by founder females and the other
consistent with existing empirical studies (Faccio et al., 2016; Huang

12
K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

types of female CEO. Future research should explore the impact of fe­ Appendix 1
male CEOs on firm behaviors more extensively, especially among Jap­ Variable definition and data sources
anese firms for which there remains a clear lack of empirical evidence. Variable Definition Source
Female CEO
5.3. Female CEOs and firm performance: ROE variables
Female CEO Equals one if a firm is run by a female CEO Directory of
and zero otherwise Directors
Up to this point, and following a voluminous literature (Adams et al., First female CEO Equals one if a firm appoints their first Directory of
2009; Adams and Ferreira, 2009; Mehrotra et al., 2013; Saito, 2008; female CEO in year t and zero otherwise Directors
Tanaka, 2019; Wintoki et al., 2012), we have used ROA and Tobin’s Q as Founder female Equals one if the CEO is an original founder Authors
proxies for firm performance and firm value. In this section, we use ROE CEO or a main executive at the time the company
was founded and zero otherwise
as an additional outcome variable and apply a similar analysis procedure Heir female CEO Equals one if the CEO is a member of the Authors
to examine the effects of female CEOs on ROE. This follows similar work founding family and zero otherwise
using ROE as the dependent variable when measuring the effects of CEO Sarariwoman CEO Equals one if the CEO is not a founder or Authors
gender and board gender diversity on firm performance (Adams, 2016; member of the founding family
Firm performance
Catalyst, 2004). In addition to ROA and Tobin’s Q, we include ROE as an
variables
independent variable because ROE provides additional information ROA Ordinary profit over total asset for second- Nikkei Needs
about the management’s effectiveness as an indicator of the direct in­ to-last accounting period CGES
terests of shareholders (Maury, 2006; Mazzi, 2011). In addition, because Tobin’s Q Fair market value plus total liabilities Nikkei Needs
firms with female CEOs are typically more risk averse with less debt than divided by total assets CGES
ROE Net profit divided by loss over equity capital Nikkei Needs
firms led by male CEOs (Faccio et al., 2016), it would be interesting to for second-to-last accounting period CGES
compare the results using ROE and ROA. Miyajima et al. (2018) noted Control variables
that during the period 2006–2013, there was a shift from ROA to ROE as Board size Number of board members Nikkei Needs
the performance indicator that was most sensitive to CEO turnover. CGES
Outside director Number of outside directors divided by total Nikkei Needs
When we specify ROE as the dependent variable, our results are
ratio board members CGES
qualitatively similar to those when we use ROA. In Table 1, the firm Female director Equals one if a firm has at least one female Nikkei Needs
group with female CEOs has a mean ROE of 3.83, which, while higher (dummy) director on board and zero otherwise CGES
than the ROE of 0.19 for the firm group with male CEOs, is nonetheless Female director Number of female directors divided by total Authors
statistically insignificant. We then use the same control set in Table 4 ratio board members
Listing duration Number of years since firm listed Nikkei Needs
and perform OLS and fixed effects regressions with ROE as the depen­ CGES
dent variable. The results are in Columns 1 and 2 of Table 11. The CEO tenure Number of years CEO has served as CEO of Nikkei Needs
estimated coefficients for the female CEO dummy variable in both re­ the firm CGES
gressions are positive in relation to ROE, but not significant. Industry dummy Tokyo Stock Exchange classification of 33 Nikkei Needs
industries CGES
Next, we check the effects of the different female CEO types on ROE
Total assets Total consolidated assets Nikkei Needs
using OLS and fixed effects regressions with the results summarized in (thousand yen) CGES
Columns 3 and 4 of Table 11. For consistency in the performance Leverage (%) Total liabilities divided by total assets Nikkei Needs
comparison, we also separate male CEOs into three similar subgroups CGES
and include quasi-founder male CEO and quasi-sarariman CEO variables Free cash flow ratio Free cash flow divided by total assets Nikkei Needs
(%) CGES
into the analysis. Sales growth ratio Sales growth divided by sales growth in last Nikkei Needs
We find the results vary with the different types of CEO. The most fiscal year CGES
important result in Table 11 is that the coefficient for heir female CEO is Foreign ownership Foreign investor share ownership divided Nikkei Needs
positive and significant at the 5% level in the fixed effects regression for (%) by total share ownership CGES
CEO ownership (%) Company stock held by CEO divided by Nikkei Needs
ROE. The estimated coefficients for founder female CEO and sarariwoman
total share ownership CGES
CEO are mixed and not statistically significant. These findings are like Entrenchment (%) Shareholding by managers divided by total Nikkei Needs
those in Table 8 where ROA is specified as the dependent variable, share ownership CGES
except for the significant impact of heir female CEO. A possible reason Volatility (%) Standard deviation of total return in the last Nikkei Needs
for this finding is that firms run by heir female CEOs have a different three accounting periods where total return CGES
is the daily average of total return
financial structure, as suggested in Table 10, with less debt financing
R&D expenses (%) R&D expenditure divided by total assets DBJ
than nonfamily firms. M&A flag Merger Flag, 0: No merger/spin-off, 1: Nikkei Needs
Merger between listed firms, 2: Acquired, 3: CGES
6. Conclusion Spin-off, 4: Merger with listed firm with
spin-off, 5: Merger with unlisted firm, 6:
Merger with unlisted firm with spin-off
We summarize our results as follows. First, the number of female
CEOs in listed firms in Japan is very low and not increasing. Around one-
third of these female CEOs are sarariwomen who have gradually climbed the fixed effects regression for Tobin’s Q. This is consistent with obser­
the corporate ladder to top management positions before attaining the vations that stock prices decline when a founder female CEO leaves the
position of CEO, while others are from a founding family, as either the firm.
founder or the heir of a founder. The study confirms the extreme paucity Overall, our findings that founder female CEOs achieve higher values
of female CEOs in Japan and demonstrates the flat trend line over the of Tobin’s Q is consistent with previous studies examining the perfor­
sample period from 2004 to 2015. Second, the study has policy impli­ mance of (male-dominated) family firms in Japan (Mehrotra et al.,
cations about mandating female directors on boards because it provides 2013; Saito, 2008). In our sample, the mean firm Tobin’s Q of a founder
suggestive evidence that having a female director increases the odds of female CEO is 2.1, while that of an heir female CEO is only 1.37. Ac­
also having a female CEO. Third, we reveal positive stock returns for the cording to Saito’s (2008) analysis of the performance of family firms in
announcement of new female CEOs. As for the accounting return, the Japan from 1990 to 1998, founder firms have a mean Tobin’s Q of 1.73,
relation between female CEOs and performance is not generally strong. whereas descendant firms have a mean Tobin’s Q of just 1.35. More
However, when we divide female CEOs into one of three types, we find recently, Mehrotra et al. (2013) reported a mean Tobin’s Q of 1.45 for
that the coefficient for founder female CEOs is positive and significant in

13
K. Kubo and T.T.P. Nguyen Journal of The Japanese and International Economies 62 (2021) 101163

Appendix 2
Summary statistics for boards of directors. This table provides summary statistics for the boards of directors. The sample consists of firms listed from 2004 to 2015
whose primary industry is not financial services.
All Firms with Firms
firms female CEO with male
CEO
Year Total Total board Total firms Total Proportion of Total firms Female Proportion of Total firms Female Statistical
firms members with female female firms with with female director firms with with female director difference of
(firm) (person) directors directors female directors percent female directors percent female
(firm) (person) director (firm) director (firm) director
percent (t-
statistic)
Sum 41,879 326,482 3,766 4,258 73 3,693
Mean 3,490 27,207 314 355 0.23 6 6.74 0.09 308 1.44
2004 3,462 29,792 226 256 0.32 8 7.51 0.07 218 1.03 7.04***
2005 3,557 29,501 248 280 0.26 7 5.42 0.07 241 1.12 4.74***
2006 3,640 29,587 291 336 0.17 5 2.75 0.09 286 1.34 1.47
2007 3,721 29,715 298 333 0.22 6 4.60 0.09 292 1.28 3.5***
2008 3,680 28,851 280 314 0.14 4 3.69 0.08 276 1.24 2.65**
2009 3,565 27,127 264 295 0.11 3 3.98 0.08 261 1.21 2.99**
2010 3,449 26,036 274 301 0.17 5 6.20 0.09 269 1.32 5.08***
2011 3,388 25,388 286 316 0.24 6 8.24 0.09 280 1.38 6.6***
2012 3,341 24,785 291 332 0.20 5 7.34 0.09 286 1.42 5.65***
2013 3,328 24,428 325 370 0.36 9 11.85 0.11 316 1.56 9.22***
2014 3,355 24,852 390 447 0.25 6 10.08 0.13 384 1.82 6.91***
2015 3,393 26,420 593 678 0.32 9 10.61 0.21 584 2.53 6.69***

Socio-Economics Annual Conference, the 6th Vietnam International

Appendix 3
Conference in Finance, JSPS Core-to-Core Program 2019: International
Determinants of the introduction of a first female CEO. This table provides the
Seminar on “Governance Reforms from Comparative Perspectives”, and
logit regression estimates of the probability of introducing a firm’s first female
CEO. The sample consists of firms listed from 2004 to 2015 whose primary in­
the 28th Conference of the Nippon Finance Association for their helpful
dustry is not financial services. All independent variables lagged one year in suggestions and comments. All remaining errors are the authors’
column (1). Firm-year observations after the first introduction are omitted. responsibility.
Robust standard errors in parentheses. *, **, and *** denote significance at the
10%, 5%, and 1% level, respectively. Funding
Dependent variable = First female CEO First female CEO
(1) (2) This research was financially supported by the Japan Society for the
Board size (t–1)/(t) –0.069 –0.0117 Promotion of Science (JSPS) “Core-to-Core Program, A. Advanced
(0.128) (0.0915)
Outside director percent (t–1)/(t) –0.003 –0.00615
Research Networks”, JSPS KAKENHI Grant Nos. 20K01758 and
(0.010) (0.0125) 19H00603 (Katsuyuki Kubo) and Waseda University Grant for Special
Female director percent (t–1)/(t) 0.081*** 0.0532*** Projects Nos. 2020C-172 (Katsuyuki Kubo) and 2019C-156 (Thanh Thi
(0.014) (0.0162) Phuong Nguyen).
Listing duration (t–1)/(t) –0.107** –0.0998***
(0.048) (0.0334)
Log (total assets) (t–1)/(t) –0.008 –0.0222 Appendices
(0.152) (0.179)
Leverage (t–1)/(t) –0.001 –0.0130
(0.010) (0.0100)
CEO ownership (t–1)/(t) –0.035 –0.079***
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