DPRIETI Discussion Paper Series 11-E-075

Labor Market Gender Disparity andCorporate Performance in Japan
Jordan SIEGELHarvard Business School

KODAMA Naomi
RIETIThe Research Institute of Economy, Trade and Industry

http://www.rieti.go.jp/en/

RIETI Discussion Paper Series 11-E-075
December 2011

Labor Market Gender Disparity andCorporate Performance in Japan
Jordan SIEGEL1

Harvard Business School

KODAMA Naomi23

Ministry of Economy, Trade and Industry, Government of Japan
Research Institute of Economy, Trade and Industry
Abstract
We address a gap in prior literature on female managerial representation and corporate
performance. Prior evidence linking increases in female managerial representation tocorporate performance has been surprisingly mixed, due in part to data limitations andmethodological difficulties. Using panel data from Japan, we are able to address several ofthese prior challenges. With the help of a nationally representative sample of Japanesefirms covering the 2000s, we find that increases in the female executive ratio, employing atleast one female executive, and employing at least one female section chief are associatedwith increases in corporate profitability in the manufacturing sector. Employing a female
executive appears particularly helpful to corporate performance for the Japanese affiliates
of North American multinationals. The results are robust to controlling for time effects andcompany fixed effects and the time-varying use of temporary and part-time employees.
Part of the competitive benefit to employing female managers is shown to come fromcompensation savings, in line with Becker’s economic theory of discrimination.
Key words: Female managerial representation; Corporate performance; Discrimination;
Wage differentials.
JEL classification: J71 – Discrimination; J31 - Wage Level and Structure; Wage
Differentials
RIETI Discussion Papers Series aims at widely disseminating research results in the form ofprofessional papers, thereby stimulating lively discussion. The views expressed in the papers aresolely those of the authors, and do not represent those of the Research Institute of Economy, Tradeand Industry.
1

jsiegel@hbs.edu
The authors are grateful to Mayuka Yamazaki, Senior Research Associate of the Harvard Business School Japan
Research Center, for excellent research assistance. We are grateful for helpful comments and suggestions by
Masayuki Morikawa, Kyoji Fukao, Kazuhiko Odaki, Kotaro Tsuru and seminar participants at RIETI. We thank theHarvard Business School Division of Research for funding assistance. All remaining errors are of course our own.
3
kodama-naomi@meti.go.jp
2

2

I.

Introduction
Can hiring the excluded group, typically women, as senior executives and middle-level

managers in the labor market help firms to become significantly more profitable? Despite
Becker’s (1957/1971) groundbreaking theoretical prediction more than five decades ago thatfirms would see higher profitability from actively employing the excluded group, the extant
empirical evidence on this question has been mixed, mostly due to data and methodologicallimitations of prior studies. For example, in the U.S. context, Deszo and Ross (2009) reported
that having a female CEO had a negative effect on corporate performance among U.S.
companies, but that having a top-five female executive had a positive effect when U.S.
companies that chose not to report R&D expenditures were excluded. Szymanski (2000) in turnshowed that English soccer-league clubs with a higher proportion of black players outperformed
other clubs on the playing field, even after controlling for the wage bill. The latter finding is anencouraging result for our study, but the question remains whether sports-league owners, who
often derive most of their earning from business activities in other industries, are an extreme caseand are much less likely to be profit-maximizing with their sports business.
Also, the best-known study from Japan analyzing the effect of female workers on
corporate performance in Japan had inconclusive results. Specifically, Kawaguchi (2007) founda profit benefit from having a higher proportion of female workers in Japan in the 1990s, but thefirms that hired women did not grow faster over time and only 5 % of the profit effect was due togender discrimination. The remaining question about this study draws on Houseman and
Abraham (2001), who showed that female workers in Japan were significantly more likely to be
temporary workers. Thus it could be that the profit benefit attributed to the proportion of female
labor in Kawaguchi’s study was conflated with the effect of an increase in temporary workers as

3a percentage of all workers. Kodama et al. (2005) found that the total ratio of female employees
did not have an impact on corporate profitability after controlling for part-time workers. That
latter study, however, did not look at the effect of female leaders/managers on performance.
Without clear empirical evidence on Becker’s profitability prediction and the mechanism
behind it, many executives in Asia we have interviewed continue to believe in an alternative
view from sociology that homogeneous leadership groups can be maximally efficient,particularly in markets like South Korea and Japan where men have traditionally been viewed as
more effective corporate and political leaders (Siegel, Pyun, and Cheon, 2011).
This paper utilizes Japanese government data that can help to deal with the prior data
limitations. Unlike prior studies, we can separately examine the effect of employing women in
leadership positions as well as in lower-level positions. Unlike prior studies on Japan andelsewhere, we can control for the cost savings that come from the fact some firms use more parttime workers than others and women are more likely to be part-time workers. Unlike priorstudies which had a difficult time showing the mechanism through which hiring female
managers helps firms to become more profitable (with the exception of our prior work in Siegel,
Pyun, and Cheon, 2011), we are able to show that in Japan at least a principal mechanism isindeed through cost savings in the managerial labor market. And we are able to corroborate theidea in Siegel, Pyun, and Cheon 2011 that large foreign multinationals are an instrument ofchange in the Japanese labor market and are serving to tip the labor market towards a new
equilibrium that is somewhat freer of gender discrimination.
Using a complementary set of internal databases from the Japanese government on
demography in Japanese firms, we test for the 2000s that employing female managers leads tohigher performance. Section II outlines the Japanese labor market context for female executives

4and managers. Section III describes the data, models, and results. Section IV discusses somerobustness issues and draws some conclusions.

II.

Japanese Context for Female Managers and Employees
Japan is one of a large number of countries from Asia, the Middle East, Africa, Latin

America, and even parts of southern Europe where there is a sharp gender disparity in the
managerial labor market. One can view this either from the perspective of representation in thelabor market or in terms of pay disparity. We will focus our attention first on the year 2005,
which represents the middle of our sample time period. In terms of labor market participation,
Japan’s female labor participation rate was 48% in 2005 according to the World Bank’s World
Development Indicators (WDI) database, which ranks Japan above Spain (46%), Italy (38%),
and Belgium (46%), and above a wide cross-section of emerging and transition economies in
Latin America, Africa, Asia, and Eastern Europe (including most prominently Mexico, Chile,
South Africa, Nigeria, all of the Arab countries, India, and Poland), and just slightly below
France (50%), Argentina (50%), Germany (51%), Hong Kong (52%), and Singapore (54%).
Similarly, the female percentage share of all professional and technical workers in Japan stood at
46% in 2005, according to the United Nations Development Programme’s (UNDP’s) 2007/08
Human Development Report (which utilized data from Year 2005), and that 46% figure wascomparable to the female shares in Hong Kong (40%), Malaysia (40%), Mexico (42%) andSingapore (44%), the same as in Italy (also 46%), and just below that of Spain (48%) (Watkins,2007).
The story for Japan when one looks at the gender wage gap is similar: the country is oneof a large number of countries with a comparable large gender wage gap. The ratio of estimated5

female to male earned income in Japan according to the UNDP’s Human Development Report
was 0.45 in 2005, which is comparable to Italy (0.47). It is also similar to the comparable value
for Chile (0.40), Mexico (0.39), and Malaysia (0.36). Data from the United Nations’ Statistics
Division encompassing the mid to late 2000s shows that women’s wages in manufacturing as apercentage of men's wages in Japan was 61%, which was similar to that of Colombia and Hong
Kong (both 60%), Brazil (also 61%), and Austria (62%), along with being higher than a broad
range of other emerging and transition economies. The above-referenced UNDP Human
Development Report, again using data from 2005, presents an overall index of female activity
that placed Japan with a score of 66%, which is similar to South Korea (with its score of 68%),
Italy (62%), Singapore (66%) and Spain (66%) (Watkins, 2007). Japan ranked on the UNDP’s
index only moderately higher than Chile (52%), Mexico (50%), and Malaysia (57%) (Watkins,2007). In summary, the picture is of a Japan with significant gender disparities, but disparities
that don’t place Japan as an outlier but rather as one of many with a comparable level ofpotentially severe gender discrimination.
Rosenbluth (2007) shows together with a team of sociologists and political scientists thatJapanese institutions do continue to hold women back in the labor market. For example, labormarket institutions make it easier for firms to rely on relatively cheap part-time and temporary
labor, where the labor is more often than not coming from women. In response to a labor market
that shuts off opportunities when women marry or give birth to children, Japanese women havebeen shown to more and more often delay or even avoid marriage and childbirth as a result(Rosenbluth, 2007).

III.

A Market Test of Gender Disparity in Japan

6

III.1

Data
We combine data from three data sets gathered repeatedly over time by the Governmentof Japan. The Establishment and Enterprise Census (EEC) is conducted twice every five years
targeting all private and public establishments (about six million) and covers every industry inJapan. EEC includes data on the number of male and female executives per establishment. We
then aggregated that information on the number of both female executives and all executives up
to the company level. We then imported company financial variables from the Basic Survey ofJapanese Business Structure and Activities (BSJBSA). EEC and BSJBSA samples were merged
when they had the same company name and postal code, or the same company name and phone
number.
From the underlying observation in the years of 2001, 2004, and 2006 count of 84,291 in
the BSJBSA, we found that 59,041 could be successfully merged with EEC. We find that thisapproximates a random sample of the original BSJBSA in terms of profitability and multiple
other characteristics.4 BSJBSA is conducted by the Ministry of Economy, Trade and Industry(METI) every year targeting firms in the manufacturing, commerce and some service industries.
The survey excludes some service industries such as finance, real estate, hospital and schools. In
addition, as the survey only targets firms which have 50 or more employees and 30 million yen
or more capital, small-sized firms are not included. The BSJBSA data include information on
ROA (operating profit/total assets), total assets (for which we take the log when running
regressions), the foreign ownership ratio, the debt/asset ratio, the export/revenue ratio, the R&D
4

The average ROA of sample companies in our analysis is 0.039, while that of pre-matched samples is0.037. The average number of employees of sample companies in our analysis is 345 employees and theaverage revenue is 18,698 million yen, while 415 employees and 23,107 million yen for all companies in
BSJBSA respectively.

7

expenditure/revenue ratio, the advertising expenditure/revenue ratio. We utilize data from theavailable survey years from the 2000s, representing specifically the years 2001, 2004, and 2006.
Then in order to study the effect of upper-middle-level female managers on corporate
managers, we utilized data from the Basic Survey on Wage Structure (BSWS). The BSWS
utilizes the following stratified sampling to sample the broad population of Japaneseestablishments. In getting a sample that reflects the broader Japanese economy by both industry
and establishment size distribution, the BSWS involves taking 70,000 establishments randomly(except for fulfilling quotas on industry and size) from the total of six million establishments inthe EEC data. It then takes a random sample of employees at those 70,000 establishments. We
aggregate the number of female managers and all managers of establishments affiliated to thesame company and then calculate the female manager percentage of each firm, by assuming
based on our knowledge of the data collection that female managers are randomly reflective of
the actual number of female managers over total managers at these firms.5 Because the random
sampling must lead to some random imprecision in measurement, this should bias the female
manager percentage variable against our finding any result.
The data aggregated to the firm level was merged with the BSJBSA data to assess theeffect of female upper-middle-level managers on corporate performance. (The current Tables 6-8
report results using firms where EEC data are also available.) Managers here included section
heads (ka-cho) and division heads (bu-cho). As BSWS is a survey that relies on sampling thebroader population of firms, the resulting sample with available financial variables consists of5

To be more precise, this is how we calculate the female manager ratio: We first calculate the number offemale managers of each establishment through multiplying the number of female managers reported in
BSWS by the inverse number of the sampling ratio. We do the same for the number of all managers. We
then aggregate the number of female managers and all managers to the firm level and calculate the female
manager ratio of each firm.

84,800 observations. We utilize data from the available survey years from the 2000s, representing
specifically the years 2001, 2004, and 2006.

III.2

Models
We first model the following fixed-effects panel OLS equation:(1) ROAkt = a + b (Female Executive Ratio [or Having At Least One Female Executive,
Having At Least One Female Section Chief, etc.]kt) + c (Total Female Employee Ratiokt)+ d (((Part-Time + Short-Term Workers)/Total Permanent Employees)kt) + e((Log(Assets))kt) + f (Foreign Ownership Percentagekt) + g (Leveragekt) + h (Foreign
Sales Ratiokt) + i (R&D Intensitykt) + j (Advertising Intensitykt) + Firmk + Yeart,
where the dependent variable represents firm k’s ROA winsorized at the .01/99.9 level at time t,6
and the independent variables include the firm’s female executive ratio (or alternatively, anothervariable or set of variables for female representation in management) at time t, the firm’s total
female employee ratio at time t, the firm’s ratio of (part-time + short-term workers)/total
permanent employees at time t, the firm’s natural log of assets at time t, the firm’s foreign
ownership percentage at time t, the firm’s leverage at time t, the firm’s foreign sales ratio at timet, the firm’s R&D intensity at time t, the firm’s advertising intensity at time t, firm fixed effects,
and year dummies. We also run a variation on this model with an interaction term between
having at least one female executive and being a North American multinational with a subsidiaryin Japan.

6

The winsorization of the few extreme values was done by taking the distribution of ROA values fromthe combined three‐year panel.

9

We then model the following dprobit equation showing marginal effects of the
independent variables on the dependent variable:(2) Having At Least One Female Section Chiefkt [or, alternatively, Having At Least One
Female Division Chiefkt] = a + b (Majority Foreign Ownershipkt) + c ((Log(Assets))kt)+ d (Leveragekt) + e (R&D Intensitykt) + f (Advertising Intensitykt) + Industryy + Yeart,
where the dependent variable represents firm k’s having at least one female section chief (or,alternatively, at least one female division chief) at time t, and the independent variables include
whether the firm is majority-foreign-owned at time t, the firm’s natural log of assets at time t, thefirm’s leverage at time t, the firm’s R&D intensity at time t, the firm’s advertising intensity attime t, industry fixed effects, and year dummies.
We then utilize the individual-level panel data on wages to model each individual’s wage:(3) Wage per Hourpijct = a + b (Is Femalepijct) + c (Tenurepijct) + d (Tenure Squaredpijct) + e(Years Since College or Less-Than-College Graduationpijct) + f (Years Since College orLess-Than-College Graduation Squaredpijct) + g (Part-Time Job Dummypijct) + h(Education Dummiespijct) + k (Region Dummiespijct) + Firmc + Job-Yearjt + IndustryYearit,
where the dependent variable is wage per hour for person p in industry i in job j in company c attime t, and the independent variables include an indicator variable for being female, job tenure,job tenure squared, years since college graduation, years since college graduation squared, an
indicator variable for the job being a part-time job, an indicator variable for junior high schoolonly education, an indicator variable for two-year college/special training school-only education,
an indicator variable for four-year college education, an indicator variable for the person’s
prefecture being Tokyo, an indicator variable for the person’s prefecture being Kanagawa, an10indicator variable for the person’s prefecture being Osaka, firm fixed effects, job title-year fixed
effects, and industry-year fixed effects.
We then model the following fixed-effects panel OLS equation explaining productivity:(4) Log(Gross Profit)kt = a + b (At Least One Female Executivekt) + c (Natural Log of
Total Employeeskt) + c (Natural Log of Fixed Assetskt) + d (Natural Log of Cost ofGoods Sold/COGS) + e (Total Female Employee Ratiokt) + f (((Part-Time + Short-Term
Workers)/Total Permanent Employees)kt) + g (Foreign Ownership Percentagekt) + h(Leveragekt) + i (Foreign Sales Ratiokt) + j (R&D Intensitykt) + k (Advertising Intensitykt)+ Firmk + Yeart,
where the dependent variable represents firm k’s natural log of gross profit at time t, and the
independent variables include the firm’s having at least one female executive at time t, the firm’s
natural log of total employees at time t, the firm’s natural log of fixed assets at time t, the firm’s
natural log of cost of goods sold (COGS) at time t, the firm’s total female employee ratio at timet, the firm’s ratio of (part-time + short-term workers)/total permanent employees at time t, thefirm’s foreign ownership percentage at time t, the firm’s leverage at time t, the firm’s foreign
sales ratio at time t, the firm’s R&D intensity at time t, the firm’s advertising intensity at time t,
firm fixed effects, and year dummies.
We then conclude by showing that the results from Equation (1) above are robust tocontrolling for different definitions of a Japanese firm’s general deviation from post-World War
II human resource management norms. As an initial proxy, we take Equation (1) and control
further for the estimate ratio of mid-career hires (estimated as 1 – (those whose work experienceat the company is more than three years different from their total working years/total company
employees) the estimated ratio of mid-career employees. This proxy focuses on the firm’s time-

11varying approximate deviation from standard labor-market-entry-point hiring and accompanying
lifetime employment practices in Japan. Then we use eight alternative proxies for the firm’s
deviation from seniority-based pay. In each of those eight proxies, we run regressions on theindividual-level wages to see how much residual there is for each individual. Then we take theresults from that individual-level regression analysis and calculate the standard deviation of theerror term divided by the mean of the error term by company-year for each company-year. The
eight alternative definitions come from looking at the combined sample of females and males
and the male-only sample, and then looking at the four variables including annual salary, naturallog of annual salary, estimated hourly wage and log of estimated hourly wage in different
combinations as listed in detail at the bottom of Table 10.

III.3

Results
As seen in Panel A of Table 1, Japan has a highly competitive economy in which theaverage ROA in our sample increases but only slightly from 2.8% in 2001 to 4.1% in 2004 and4.4% in 2006. These numbers show that Japan has a far more competitive industrial structure
than the United States, where the comparable numbers are known to be in the high single digits,
and slightly more competitive than South Korea, which the comparable numbers are in the range
of 5% (Siegel, Pyun, and Chun 2011). In a market with such high levels of industrial competition,
hiring talent from Japan’s excluded social group in labor market—women—might be a positive
differentiating factor for firms, as our later results show. As also reported in Panel A of Table 1,
the average female executive ratio in Japan is quite small, increasing but only slightly from 6.8%
in 2001 to 7.4% in 2004 only to move down to 7.2% in 2006.

12

Table 2 shows that having a higher female executive ratio is associated with increases in
profitability in the manufacturing sector. In contrast, it has no significant effect in the services
sector. Similarly, in Table 3 we find that having at least one female executive has a significantly
positive effect on ROA in the manufacturing sector, whereas the effect is actually negative andmarginally statistically significant in the services sector. All of these results are with the key
control for use of temporary and part-time employees included.
It is an established fact that the Japanese services sector has far more female-owned
businesses than the manufacturing sector and that female-owned business are more likely to
struggle financially in Japan because of structural disadvantages they face in the industries theytend to enter. Many of these female-owned service sector firms are small (Ministry of Health,
Labor and Welfare, 2007; Ministry of Economy, Trade and Industry, 2011) and lacking in any
competitive differentiation. As shown by METI (2004), women tend to start businesses inindustries where the firm-size distribution is already skewed towards small firms, and womentend to be likelier than men to exit self-employment. Past Japanese government white papers andreports have reported data indicating that female entrepreneurs are more likely than maleentrepreneurs to have started their business without prior work experience (Ministry of Health,
Labor and Welfare, 2007; Kodama and Odaki, 2011) and to have goals that are less solely
focused on profit (Ministry of Economy, Trade and Industry, 2011). While there is a surprisingly
large number of female-owned businesses in Japan, the value-added ratio of these businesses issmall (Ministry of Economy, Trade and Industry, 2004). We will be doing more work in the
future to test our working hypothesis that it is female ownership of marginally competitive
service sector businesses that is driving the interesting, albeit only marginally statisticallysignificant, negative result for having at least one female executive in the service sector.

13

We next find in Panel A of Table 4 that North American-owned affiliates in Japan havebenefited particularly from having at least one female executive. We view this as at leastsuggestive evidence of foreign multinationals benefiting from hiring the excluded group into
positions of corporate leadership and being among the actors starting to move the Japanese labormarket towards a new equilibrium.
Returning to the differences between the Japanese manufacturing and services sector, weshow in Table 5 that service sector companies of 150 employees and greater are far more often
employing at least one female executive. We will be examining in our future work whether thisis primarily a function of higher female ownership levels in the services sector.
We next examine the possible effect of upper-middle-level female managers on corporate
performance in Japan. In Table 6 we find that the medium- to large-size Japanese companies thathave upper-middle-level managers only very rarely have female managers. Interestingly, themean ratio of female section chiefs goes from 0.019 in 2001 to 0.032 in 2004 and to 0.037 in
2006. So the mean ratio is increasing in a measured way from a low base. That low base is atunder 2% in 2001. And that low base is much lower than the female executive ratio we saw in
the 7% range in Table 1. This remaining difference between the female section chief ratio in
Table 6 and the female executive ratio in Table 1 is due to the fact that there are a large numberof female-owned small businesses in the service sector, with most of these female businesses
never rising to the size level where they would need middle management.
We then show in Table 7 that having at least female section chief is uniformly useful tocorporate performance. This is true for a sample that comprises the entire Japanese economy—both manufacturing and services. However, in looking closely at the data, we find that the result
is particularly driven by the manufacturing sector.

14

Next, we find in Table 8 that foreign-owned firms hire female section chiefs and female
division chiefs at far higher rates than the general population of Japanese firms. Furthermore,
majority-owned foreign firms typically have higher female managerial representation than evenminority-owned foreign firms, which in turn typically have higher female managerial
representation than domestic firms. As seen in Panel A of Table 8, majority-owned foreign firms
employ at least one female section chief at a rate that is more than two and a half times higher
than for the sample of all firms. Majority-owned foreign firms have a female section chief ratiothat is 50% higher than for the sample of all firms. Majority-owned foreign firms employ at least
one female division chief at a rate that is more than five times higher than for the sample of all
firms. Majority-owned foreign firms have a female division chief ratio that is more than fivetimes higher than for the sample of all firms. We then also show in Panel B of Table 8 thatmajority-owned foreign firms are significantly more likely to have at least one female section
chief and at least one female division chief, even after controlling for firm size, leverage, R&D
intensity, advertising intensity, industry, and year dummies.
Next, we show in Panel A of Table 9 that a significant mechanism behind the profit
differences is that companies simply pay their female managers significantly less, evencontrolling for tenure, job experience, education, part-time status, geographic location, company
fixed effects, job title*year fixed effects, and industry*year fixed effects. We find that this is
powerful evidence of Becker’s wage-based explanation being able to explain much of the profit
opportunity for companies in employing female managers in Japan.7
Still, differences in pay are just part of the story in Japan. We show in Panel B of Table 9that adding at least one female executive leads to a boost in productivity in the firm level. This7

We also confirmed that the wage difference is not driven by differences in family benefits received between male and female
managers.

15is true even when controlling for the standard input-based determinant of productivity as well asa range of other controls, including firm fixed effects and year dummies. Strikingly, the Becker
explanation is highly incomplete for explaining the Japanese data. Clearly, there is something
about adding female leadership which leads to higher productivity in Japanese manufacturing
companies.
Lastly, we conclude our empirical analysis by showing in Table 10 that our results from
Tables 2-3 are robust to further controlling for nine alternative definitions of Japanese firms’
deviation from standard Japanese human resource management practices. Specifically, ourresults are not driven by some Japanese firms’ deviation from seniority-based promotion orseniority-based pay. This strongly suggests that female managerial representation is acting
independently in its influence of company profitability.

IV. Conclusion
In conclusion, this paper has shown that manufacturing firms in Japan have benefited
from hiring female executives and female managers, and that a significant part of the benefit inJapan may come from cost savings. The findings in this paper are consistent with the notion thatsome owners of Japanese firms indulged in what Becker described as a “taste for discrimination”
while others exploited the sexism of their peers and hired members of the excluded group tosenior management positions. Those that went against this social norm of discriminating against
women in the managerial labor market appear to have attained higher profitability. Part of thehigher profitability came from lower compensation costs, but part of it clearly comes from a
productivity boost that follows the addition of female managerial leadership. The latter results

16shows that the Becker pay-based explanation needs to be reformulated to take on a major
productivity effect of female leadership in the world’s third-largest economy.
Interestingly, the same is not often true for service sector firms. Past studies along with
contemporary demographic data shed light on why this would be the case. We know from paststudies that women are more likely to start their own firms in the service sector, that they are
more likely to start firms in the least profitable and structurally attractive parts of the service
sector, that they exit self-employment more often than men. We know from contemporary
demographic data that female ownership is far higher in the service sector. Also, at the same time
we know that women have a higher representation in management in the Japanese service sector.
Thus, Japanese service sector firms may have less opportunity for competitive differentiation in
hiring female managers than do Japanese manufacturing firms. Yet unfortunately there currently
seems no way to match past surveys of female entrepreneurship with the data sets on firm
performance used in this paper. Thus, further research should be aimed at utilizing a combinationof quantitative and qualitative data collection on female ownership and linking that to firm
performance.
In closing, whereas past studies found mixed results on Becker’s profit hypothesis due todata and methodological limitation, we have found striking contemporary evidence from Japanthat manufacturing companies systematically benefit from starting to employ female executives
and female upper-middle managers. We also find strong evidence that part of this benefit comesfrom cost savings due to lower compensation costs given in Japan to female executives andfemale managers, while another large part comes from a productivity boost that follows the
addition of female managerial leadership. Thus, this study is one of the first to provide strong
empirical support for Becker’s profit hypothesis and proposed cost savings mechanisms, in the17world’s third largest economy no less. But yet it shows that Becker’s proposed causal
mechanism, relying solely on pay differences, is quite incomplete. What is also interesting is thatthe profit benefit does not appear to have been quickly erased in the 2000s, but appears to be atleast a medium-term opportunity for Japanese firms before the market moves on to a new
equilibrium “freer” of discrimination.

References
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18

Table 1. Summary Statistic s and Corre lation Matrix
Panel A. Summary Statistics for All Firms
Variable
ROA Winsorized at the .01/99.9 Percent Levels

Year

Mean
MedianStd. Dev. Min
Max
Obs
2001
0.028
0.022
0.057
-0.437
0.369
16098
2004
0.041
0.031
0.059
-0.437
0.369
15181
2006
0.044
0.034
0.066
-0.4370.369
19734
Female Executive Ratio
2001
0.068
0.000
0.141
0.000
1.000
16098
2004
0.074
0.000
0.154
0.000
1.000
15181
2006
0.072
0.000
0.150
0.000
1.000
19734
Female Total Employee Ratio
2001
0.313
0.262
0.194
0.000
1.000
16098
2004
0.310
0.264
0.190
0.000
1.000
15181
2006
0.387
0.327
0.249
0.000
1.000
19734
(Part-Time + Short-Term Workers)/Total Full-Time Permanent Employees
2001
0.313
0.037
1.063
0.000
35.176
16098
2004
0.368
0.045
1.261
0.000
46.545
15181
2006
0.632
0.085
3.414
0.000 255.500
19734
Log(Assets)
2001
8.240
8.078
1.302
4.111
16.467
16098
2004
8.138
7.988
1.268
3.689
15.326
15181
2006
8.298
8.135
1.386
3.850
16.375
19734
Foreign Ownership Percentage
2001
1.182
0.000
8.891
0.000 100.000
16098
2004
1.430
0.000
9.766
0.000 100.000
15181
2006
1.898
0.000
10.9060.000 100.000
19734
Leverage
2001
0.703
0.735
0.279
0.000
9.251
16098
2004
0.683
0.711
0.304
-1.175
11.593
15181
2006
0.664
0.687
0.294
0.010
13.577
19734
Foreign Sales Ratio
2001
0.022
0.000
0.085
0.000
1.000
16098
2004
0.023
0.000
0.087
0.000
1.000
15181
2006
0.027
0.000
0.096
0.000
1.000
19734
R&D intensity
2001
0.006
0.000
0.019
0.000
0.468
16098
2004
0.005
0.000
0.016
0.000
0.294
15181
2006
0.006
0.000
0.039
0.000
3.527
19734
Advertising intensity
2001
0.005
0.001
0.016
0.000
0.502
16098
2004
0.006
0.001
0.018
0.000
0.625
15181
2006
0.006
0.001
0.019
0.000
0.504
19734
Note: The min and max for winsorized ROA is the same across the three years because the winsorization was done on the panel.

Panel B. Correlation Matrix
Variable
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[1] ROA winsorized at the .01/99.9 percent levels
1[2] Female executive ratio-0.011**
1[3] Female total employee ratio
0.013*** 0.161***1[4] (Part-Time + Short-Term Workers)/Total Full-Time Permanent Employees
0.012*** 0.057*** 0.144***1[5] Log(Assets)
0.035*** -0.159*** -0.041*** -0.039***1[6] Foreign Ownership Percentage
0.094*** -0.047***0.004 -0.011** 0.151***
1[7] Leverage-0.217*** -0.013*** 0.013*** 0.013*** -0.117*** -0.046***1[8] Foreign Sales Ratio
0.043*** -0.054*** -0.019*** -0.037*** 0.207*** 0.137*** -0.080***
1[9] R&D intensity-0.002 -0.046*** -0.023*** -0.028*** 0.139*** 0.067*** -0.107*** 0.162***1[10] Advertising intensity
0.012*** 0.060*** 0.120*** 0.046*** 0.079*** 0.066*** -0.043*** -0.018*** 0.061***
Note: *** denotes significance at the .01 level, ** at the .05 level, and * at the .10 level.

19

Panel C. Summary Statistics for Manufacturing Firms Only
Variable
ROA Winsorized at the .01/99.9 Percent Levels

Year
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006

Female Executive Ratio

Female Total Employee Ratio(Part-Time + Short-Term Workers)/Total Full-Time Permanent Employees

Log(Assets)

Foreign Ownership Percentage

Leverage

Foreign Sales Ratio

R&D intensity

Advertising intensity

Panel D. Summary Statistics for Service Firms Only
Variable
ROA winsorized at the .01/99.9 percent levels

Year

Mean
MedianStd. Dev. Min
Max
Obs
0.024
0.021
0.057
-0.437
0.369
0.043
0.033
0.058
-0.437
0.369
0.045
0.036
0.064
-0.437
0.369
0.067
0.000
0.139
0.000
1.000
0.077
0.000
0.153
0.000
1.000
0.070
0.000
0.144
0.000
1.000
0.291
0.247
0.186
0.000
0.962
0.285
0.247
0.177
0.000
1.000
0.394
0.333
0.265
0.000
1.000
0.186
0.035
0.599
0.000
12.750
0.199
0.044
0.592
0.000
11.523
0.305
0.074
1.870
0.000
111.000
8.210
8.014
1.285
4.111
15.097
8.066
7.878
1.229
4.143
15.006
8.338
8.126
1.350
3.871
15.179
1.193
0.000
8.371
0.000
100.000
1.398
0.000
9.009
0.000
100.000
1.978
0.000
10.4630.000
100.000
0.676
0.706
0.268
0.020
3.849
0.653
0.684
0.271
-0.213
5.736
0.640
0.662
0.271
0.010
6.308
0.033
0.000
0.102
0.000
1.000
0.035
0.000
0.107
0.000
0.993
0.044
0.000
0.121
0.000
1.000
0.010
0.000
0.023
0.000
0.468
0.009
0.000
0.020
0.000
0.294
0.010
0.000
0.050
0.000
3.527
0.004
0.001
0.014
0.000
0.502
0.004
0.001
0.014
0.000
0.353
0.004 4.64e-04
0.016
0.000
0.504

8803
7704
9723
8803
7704
9723
8803
7704
9723
8803
7704
9723
8803
7704
9723
8803
7704
9723
8803
7704
9723
8803
7704
9723
8803
7704
9723
8803
7704
9723

Mean
MedianStd. Dev. Min
Max
Obs
2001
0.032
0.022
0.058
-0.437
0.369
7295
2004
0.038
0.029
0.061
-0.437
0.369
7477
2006
0.042
0.032
0.069
-0.4370.369
10011
Female executive ratio
2001
0.069
0.000
0.144
0.000
1.000
7295
2004
0.072
0.000
0.155
0.000
1.000
7477
2006
0.075
0.000
0.155
0.000
1.000
10011
Female total employee ratio
2001
0.338
0.279
0.199
0.000
1.000
7295
2004
0.336
0.280
0.200
0.000
1.000
7477
2006
0.380
0.322
0.233
0.000
1.000
10011
(Part-Time + Short-Term Workers)/Total Full-Time Permanent Employees
2001
0.467
0.042
1.420
0.000
35.176
7295
2004
0.542
0.047
1.675
0.000
46.545
7477
2006
0.949
0.102
4.403
0.000
255.500
10011
Log(Assets)
2001
8.276
8.161
1.322
4.407
16.467
7295
2004
8.212
8.118
1.303
3.689
15.326
7477
2006
8.259
8.144
1.420
3.850
16.37510011
Foreign Ownership Percentage
2001
1.168
0.000
9.482
0.000
100.000
7295
2004
1.463
0.000
10.4900.000
100.000
7477
2006
1.820
0.000
11.3210.000
100.000
10011
Leverage
2001
0.735
0.765
0.288
0.000
9.251
7295
2004
0.713
0.740
0.333
-1.175
11.593
7477
2006
0.687
0.712
0.313
0.023
13.577
10011
Foreign Sales Ratio
2001
0.009
0.000
0.055
0.000
1.000
7295
2004
0.010
0.000
0.056
0.000
1.000
7477
2006
0.011
0.000
0.059
0.000
0.977
10011
R&D intensity
2001
0.002
0.000
0.013
0.000
0.417
7295
2004
0.002
0.000
0.010
0.000
0.280
7477
2006
0.002
0.000
0.023
0.000
0.996
10011
Advertising intensity
2001
0.007
0.001
0.017
0.000
0.390
7295
2004
0.008
0.001
0.021
0.000
0.625
7477
2006
0.008
0.001
0.021
0.000
0.472
10011
Note: The ROA winsorization was done on the three-year combined panel of observations, and that is why the min and max are the same across those three
years.

20

Table 2. A Tale of Two Sectors: The Effect of Fe male Executive Ratio on ROA[1] DV: ROA, for Manufacturing Sector
Independent Variable:
Female Executive Ratio
Total Female Employee Ratio(Part-Time + Short-Term
Workers)/Total Full-Time Permanent
Employees

0.011**[0.004]0.014***[0.003][2] DV: ROA, for Services Sector-0.008[0.005]0.003[0.004]-1.4e-04
3.091e-04[2.789e-04][3.014e-04]
Log (Assets)
0.023***-0.006**[0.004][0.003]Foreign Ownership Percentage
7.31E-05-5.6e-05[1.441e-04][1.478e-04]
Leverage-0.088***-0.025**[0.013][0.010]Foreign Sales Ratio
0.025**
0.018[0.010][0.017]
R&D Intensity-0.119-0.149***[0.082][0.046]Advertising Intensity-0.128*-0.474***[0.069][0.151]
Year Dummies Included
Yes
Yes
Company Fixed Effects Included
Yes
Yes
p value
0.000
0.000
Obs
26230
24783
R-square
0.094
0.023
Note: *** indicates significance at the .01 level, ** significance at the .05 level, and * significance at the .10 level

21

T3 . A Tale of Two Se ctors: Th e Effe ct of Having At Least On e Female Exec u tive on ROA[1] DV: ROA, for Manufacturing Sector
Independent Variable:
At Least One Female Executive
Total Female Employee Ratio(Part-Time + Short-Term
Workers)/Total Full-Time Permanent
Employees[2] DV: ROA, for Services Sector

0.003**[0.001]0.014***[0.003]-1.352e-04[2.777e-04]
Log (Assets)
0.023***[0.004]Foreign Ownership Percentage
7.2e-05[1.441e-04]
Leverage-0.088***[0.013]Foreign Sales Ratio
0.025**[0.011]R&D Intensity-0.119[0.082]Advertising Intensity-0.129*[0.069]Year Dummies Included
Yes
Company Fixed Effects IncludedYes
p value
0.000
Obs
26230
R-square0.094
Note: *** indicates significance at the .01 level, ** significance at the .05 level, and * significance at the .10 level-0.002*[0.001]
0.003[0.004]3.007e-04[3.003e-04]-0.006**[0.003]-5.4e-05[1.479e-04]-0.025**[0.010]0.018[0.017]-0.148***[0.046]-0.474***[0.151]
Yes
Yes
0.000
24783
0.023

22

Table 4. North Ame ric an Multination als and Female Exec utives
Pan el A. Th e Largest Gain is For North Ame ric an Man ufac turing Companies That
Hire or Promote A Female Exec utive
DV: ROA, for Manufacturing Sector
Independent Variable:
At Least One Female Executive
0.003**[0.001]At Least Two Female Executives
0.001[0.002]
North American ownership
0.009[0.042]
North American ownership * At Least One Female
Executive
0.059***[0.002]
Total Female Employee Ratio
0.018***[0.003](Part-Time + Short-Term Workers)/Total Full-Time
Permanent Employees-1.235e-04[2.306e-04]
Log (Assets)
0.025***[0.004]Foreign Ownership Percentage
6.53e-05[1.621e-04]
Leverage-0.087***[0.012]Foreign Sales Ratio
0.028***[0.011]R&D Intensity-0.111***[0.079]Advertising Intensity-0.129*[0.073]
Year Dummies Included
Yes
Company Fixed Effects IncludedYes
p value
0.000
Obs
23812
R-square0.098
Note: *** indicates significance at the .01 level, ** significance at the .05 level, and *significance at the .10 level23

Table 5. In Firms With More Than 15 0 Employees, Fe male Man agerial Represen tation Is More of a Dif fere ntiation Sou rce
in Manu factu rin g

Size of Firms
50-99
100-149
150-199200-299300-999
More than 1,000

ROA for
ROA forManufacturing
Services
0.033
0.038
0.041
0.040
0.042
0.045

Proportion with At Proportion with At
Least One Female Least One Female
Female Executive
Executive in
Ratio forFemale Executive Executive inServices
Manufacturing
Ratio for Services Manufacturing
0.031
0.098
0.080
0.314
0.264
0.037
0.081
0.071
0.280
0.250
0.037
0.060
0.069
0.234
0.249
0.039
0.047
0.070
0.187
0.246
0.046
0.029
0.060
0.135
0.236
0.056
0.016
0.074
0.109
0.316

24

Table 6 . Summary Statistic s on Firms with Fe male Manage rs an d Correlation Matrix
Panel A. Summary Statistics for All Firms
Variable
ROA

At Least One Female Section Chief

Female Section Chief Ratio

At Least One Female Division Chief

Female Division Chief Ratio

Female Employee Ratio(Part-Time + Short-Term Workers)/ Total FullTime Permanent Employees

Log(Assets)

Foreign Ownership Percentage

Leverage

Foreign Sales Ratio

R&D Intensity

Advertising Intensity

Year

Mean

MedianStd. Dev.
Min
Max
Obs
0.023
0.048
-0.354
0.348
0.035
0.048
-0.185
0.423
0.035
0.051
-0.354
0.368
0.000
0.257
0.000
1.000
0.000
0.302
0.000
1.000
0.000
0.326
0.000
1.000
0.000
0.101
0.000
1.000
0.000
0.126
0.000
1.000
0.000
0.136
0.000
1.000
0.000
0.120
0.000
1.000
0.000
0.143
0.000
1.000
0.000
0.161
0.000
1.000
0.000
0.064
0.000
1.000
0.000
0.077
0.000
1.000
0.000
0.092
0.000
1.000
0.207
0.172
0.000
0.931
0.233
0.171
0.000
1.000
0.392
0.250
0.000
1.000

2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006

0.027
0.043
0.044
0.071
0.101
0.120
0.019
0.032
0.037
0.015
0.021
0.027
0.006
0.009
0.012
0.256
0.272
0.437

1427
1686
1686
1427
1686
1686
1427
1686
1686
1427
1686
1686
1427
1686
1686
1427
1686
1686

2001

0.179

0.023

0.581

0.000

10.518

1427

2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006
2001
2004
2006

0.234
0.441
9.698
9.638
9.716
2.640
3.272
3.907
0.647
0.618
0.633
0.051
0.052
0.049
0.015
0.013
0.012
0.007
0.008
0.007

0.030
0.061
9.484
9.388
9.421
0.000
0.000
0.000
0.664
0.631
0.658
0.000
0.000
0.000
0.002
0.001
0.000
0.002
0.001
0.001

0.893
1.575
1.611
1.662
1.784
10.517
10.56412.052
0.234
0.238
0.238
0.129
0.130
0.130
0.029
0.025
0.030
0.017
0.023
0.018

0.000
0.000
4.727
5.886
5.342
0.000
0.000
0.000
0.020
0.059
0.049
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000

17.22529.252
16.46716.38816.375100.000
100.000
100.000
1.793
2.317
1.818
0.960
0.983
0.996
0.369
0.250
0.412
0.204
0.437
0.272

1686
1686
1427
1686
1686
1427
1686
1686
1427
1686
1686
1427
1686
1686
1427
1686
1686
1427
1686
1686

Panel B. Correlation Matrix
Variable
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[1] ROA
1[2] At Least One Female Section Chief
0.034**
1[3] Female Section Chief Ratio
0.026* 0.734***
1[4] At Least One Female Division Chief
0.003 0.126*** 0.080***
1[5] Female Division Chief Ratio-0.005 0.064*** 0.060***
0.784***
1[6] Female Employee Ratio
0.031** 0.120*** 0.128***0.068*** 0.078***1[7] (Part-Time + Short-Term Workers)/Total
1
Full-Time Permanent Employees
0.039*** 0.092*** 0.129***
0.036** 0.033** 0.207***[8] Log(Assets)
0.051*** 0.052*** -0.059***
0.021 -0.032** -0.081*** -0.030**
1[9] Foreign Ownership Percentage
0.125*** 0.066***-0.0020.043*** 0.028**-0.014-0.024 0.370***1[10] Leverage-0.269***0.022
0.036**
0.022 0.037** 0.031** 0.041*** -0.199*** -0.166***1[11] Foreign Sales Ratio
0.037**-0.019 -0.042***-0.022 -0.025* -0.037*** -0.070*** 0.304*** 0.283*** -0.165***1[12] R&D Intensity
0.045***
0.001 -0.051***-0.004-0.021 -0.085*** -0.085*** 0.339*** 0.261*** -0.270*** 0.366***1[13] Advertising Intensity
0.023 0.138*** 0.095***
0.109*** 0.078*** 0.070*** 0.076*** 0.141*** 0.109*** -0.112*** -0.028** 0.058***
Note: *** indicates significance at the .01 level, ** significance at the .05 level, and * significance at the .10 level25

Table 7. Fe male Section Chief Effect
DV: ROA
Independent Variable:
At Least One Female Section Chief
Female Section Chief Ratio
At Least One Female Division Chief
Female Division Chief Ratio
Total Female Employee Ratio(Part-Time + Short-Term Workers)/Total Full-Time Permanent
Employees

0.008**[0.003]-0.013[0.009]0.006[0.009]-0.017[0.019]0.002[0.007]0.001[0.001]0.008[0.010]Foreign Ownership Percentage
4.938e-04**[1.972e-04]
Leverage-0.084***[0.021]
Foreign Sales Ratio-0.005[0.020]R&D Intensity-0.398***[0.100]Advertising Intensity-0.207[0.161]
Year Dummies Included
Yes
Company Fixed Effects IncludedYes
p value
0.000
Obs
4799
R-square0.123
Note: *** indicates significance at the .01 level, ** significance at the .05 level, and * significance at the .10 level

Log (Assets)

26

Table 8 . Foreign Owne rship an d Female Repre sentation in Manageme nt
Panel A. Summary Statistics
All Firms
More Than 10% Foreign Ownership
More Than 20% Foreign Ownership
More Than 25% Foreign Ownership
More Than 30% Foreign Ownership
More Than 33% Foreign Ownership
More Than 40% Foreign Ownership
More Than 50% Foreign Ownership
More Than 60% Foreign Ownership
More Than 70% Foreign Ownership
More Than 80% Foreign Ownership
More Than 90% Foreign Ownership
100% Foreign Ownership

Have At Least One Female Section Chief
0.099
0.153
0.167
0.173
0.158
0.167
0.221
0.255
0.250
0.278
0.273
0.250
0.240

Female Section Chief Ratio

At Least One Female Division Chief
0.030
0.026
0.027
0.026
0.026
0.030
0.039
0.046
0.049
0.054
0.055
0.046
0.049

Panel B. Multivariate Regression Predicting Female Representation in Management
Model 1
DV: At Least One Female Section Chief
Dprobit regression
Marginal probabilities are shown with thestandard errors below them
Independent Variables:
Majority Foreign Ownership
0.111***[0.051]
Log(assets)
0.008***[0.003]
Leverage
0.037**[0.018]R&D Intensity
0.234[0.160]Advertising Intensity
0.646***[0.179]Industry Dummies Included
Yes
Year Dummies Included
Yes
p-value
0.000
R-square
0.114
Obs
4717

Female Division Chief Ratio
0.021
0.029
0.040
0.041
0.058
0.061
0.078
0.106
0.100
0.111
0.091
0.071
0.040

0.009
0.009
0.014
0.014
0.020
0.025
0.034
0.051
0.058
0.065
0.040
0.039
0.040

Model 2
DV: At Least One Female Division Chief
Dprobit regression
Marginal probabilities are shown with thestandard errors below them
0.090***[0.055]0.002[0.002]0.022**[0.010]0.104[0.074]0.230***[0.078]
Yes
Yes
0.000
0.115
3313

Note: The sample size falls to 4717 in Model 1 because of the few industries that predict the dependent variable perfectly (typicallybecause not a single firm in that industry has a single female section chief). The sample size drops further to 3313 in Model 2,
because an additional number of industries predict the dependent variable perfectly (typically because not a single firm in thatindustry has a single female division chief).

27

Table 9. Wage an d Produ ctivity Me ch anisms for Female Man agers

Panel A. Wage Mechanism
Managers Only
DV: Wage per Hour
Independent Variable:
Is Female
TenureTenure^2Years since college or less-than-college graduation
Years since college or less-than-college graduation^2
Part-time Job Dummy
Junior High School Education (Education = 9 years)
Two-Year College/Special Training School Education(Education = 14 years)
Four-Year College Education (Education = 16 years)
Prefecture is Tokyo
Prefecture is Kanagawa
Prefecture is Osaka-0.025***[0.004]0.006***[5.239e-04]-8.69e-05***[1.17e-05]
0.005***[0.001]-8.34e-06[1.41e-05]
0.186***[0.051]-0.023***[0.004]0.019***[0.003]0.044***[0.002]0.005[0.008]-0.002[0.010]0.008[0.014]
Yes
Yes
Yes
0.000
1162630.221

Company Fixed Effects Included
Job Title*Year Fixed Effects Included
Industry*Year Fixed Effects Included
p valueObs
R-squareNote: The reference group for education is High School Graduates(Education = 12 years)
Note: For both panels, *** indicates significance at the .01 level, ** significanceat the .05 level, and * significance at the .10 level

28

Panel B. Productivity Mechanism
Manufacturing Sector
DV: log(Gross Profit)
Independent Variable:
At Least One Female Executivelog(Total Employees)log(Fixed Assets)log(Imputed Purchased Inputs)
Total Female Employee Ratio(Part-Time + Short-Term Workers)/Total
Full-Time Permanent Employees
Foreign Ownership Percentage

Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

Year Dummies Included
Company Fixed Effects Included
p valueObs
R-square0.023**[0.010]0.247***[0.032]0.007[0.019]0.581***[0.027]0.113***[0.024]7.53e-05[0.002]0.001[0.001]-0.526***[0.058]0.209**[0.102]-0.308***[0.245]2.329*[1.244]

Yes
Yes
0.000
25895
0.253

Table 1 0 . Main Resu lts Are Robu st to Proxie s f or Gen e ral De viation from Post-World War II Japan ese H uman Resourc e Manage me n t Prac tic es

Panel A. Robustness to Proxy for
Ratio of Mid-Career Hires

Panel B. Robustness to Proxies for Seniority-Based Compensation along with Proxy for Ratio of Mid-Career Hires

DV: ROA
winsorized atthe .01/99.9
level

DV: ROA
winsorized atthe .01/99.9
level

DV: ROA
winsorized atthe .01/99.9
level

DV: ROA
winsorized atthe .01/99.9
level

DV: ROA
winsorized atthe .01/99.9
level

DV: ROA
winsorized atthe .01/99.9
level

DV: ROA
winsorized atthe .01/99.9
level

DV: ROA
winsorized atthe .01/99.9
levelIndependent Variable:

Independent Variable:

Independent Variable:

Independent Variable:

Independent Variable:

Independent Variable:

Independent Variable:

Independent Variable:

At Least One Female
Section Chief

At Least One Female
Section Chief

At Least One Female
Section Chief

At Least One Female
Section Chief

At Least One Female
Section Chief

At Least One Female
Section Chief

At Least One Female
Section Chief

At Least One Female
Section Chief

Female Section
Chief Ratio

At Least One Female
Division Chief

0.008**[0.003]-0.013[0.009]0.006

Female Section
Chief Ratio

At Least One Female
Division Chief[0.009]Female Division
Chief Ratio
Total Female
Employee Ratio(Part-Time + ShortTerm Workers)/Total
Full-Time Permanent
Employees
Log (Assets)
Foreign Ownership
Percentage
Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

Ratio of Mid-CareerHires-0.017[0.019]0.002[0.007]0.001[0.002]0.008[0.010]4.92e-04[1.971e-04]-0.084***[0.021]-0.006[0.020]-0.398***[0.100]-0.211[0.161]-0.006[0.009]0.008**[0.004]-0.013[0.009]0.007

Female Section
Chief Ratio

At Least One Female
Division Chief[0.010]Female Division
Chief Ratio
Total Female
Employee Ratio(Part-Time + ShortTerm Workers)/Total
Full-Time Permanent
Employees
Log (Assets)
Foreign Ownership
Percentage
Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

First Alternative
Definition of
Deviation from
Seniority-Based Pay
Ratio of Mid-CareerHires-0.017[0.019]0.002[0.007]0.001[0.002]0.005[0.010]0.001***[2.103e-04]-0.080***[0.021]-0.005[0.020]-0.399***[0.102]-0.310*[0.166]

3.053e-04[1.16e-04]

0.008**[0.004]-0.016*[0.009]0.007

Female Section
Chief Ratio

At Least One Female
Division Chief[0.010]Female Division
Chief Ratio
Total Female
Employee Ratio(Part-Time + ShortTerm Workers)/Total
Full-Time Permanent
Employees
Log (Assets)
Foreign Ownership
Percentage
Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

Second Alternative
Definition of
Deviation from
Seniority-Based Pay
Ratio of Mid-CareerHires-0.017[0.019]0.002[0.007]0.001[0.002]0.005[0.010]0.001***[2.094e-04]-0.079***[0.021]-0.005[0.020]-0.405***[0.101]-0.314*[0.168]0.001*[0.001]0.008**[0.004]-0.013[0.009]0.007

Female Section
Chief Ratio

At Least One Female
Division Chief[0.010]Female Division
Chief Ratio
Total Female
Employee Ratio(Part-Time + ShortTerm Workers)/Total
Full-Time Permanent
Employees
Log (Assets)
Foreign Ownership
Percentage
Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

Third Alternative
Definition of
Deviation from
Seniority-Based Pay
Ratio of Mid-CareerHires-0.008-0.008[0.009][0.009]Year Dummies
Year Dummies
Year Dummies
Year Dummies
IncludedYes
IncludedYes Included
Yes
IncludedCompany FixedCompany FixedCompany FixedCompany Fixed
Effects Included
Yes
Effects Included
Yes Effects Included
Yes
Effects Included
p value
0.000
p value
0.000
p value
0.000
p value
Obs
4799
Obs
4667
Obs
4646
Obs
R-square0.123
R-square0.129
R-square0.130
R-squareNote: For both panels, *** indicates significance at the .01 level, ** significance at the .05 level, and * significance at the .10 level-0.017[0.019]0.002[0.007]0.001[0.002]0.005[0.010]0.001***[2.093e-04]-0.079***[0.021]-0.005[0.020]-0.404***[0.102]-0.301*[0.166]2.6e-05[2.83e-05]-0.008[0.009]
Yes
Yes
0.000
4667
0.129

0.008**[0.004]-0.016*[0.009]0.007

Female Section
Chief Ratio

At Least One Female
Division Chief[0.010]Female Division
Chief Ratio
Total Female
Employee Ratio(Part-Time + ShortTerm Workers)/Total
Full-Time Permanent
Employees
Log (Assets)
Foreign Ownership
Percentage
Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

Fourth Alternative
Definition of
Deviation from
Seniority-Based Pay
Ratio of Mid-Career
Hires
Year Dummies
IncludedCompany Fixed
Effects Included
p valueObs
R-square-0.017[0.019]0.002[0.007]0.001[0.002]0.005[0.010]0.001***[2.099e-04]-0.080***[0.021]-0.005[0.020]-0.404***[0.102]-0.319*[0.168]-3.111e-04[2.018e-04]-0.008[0.009]
Yes
Yes
0.000
4646
0.130

0.008**[0.004]-0.013[0.009]0.007

Female Section
Chief Ratio

At Least One Female
Division Chief[0.010]Female Division
Chief Ratio
Total Female
Employee Ratio(Part-Time + ShortTerm Workers)/Total
Full-Time Permanent
Employees
Log (Assets)
Foreign Ownership
Percentage
Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

Fifth Alternative
Definition of
Deviation from
Seniority-Based Pay
Ratio of Mid-Career
Hires
Year Dummies
IncludedCompany Fixed
Effects Included
p valueObs
R-square-0.017[0.019]0.002[0.007]0.001[0.002]0.005[0.010]0.001***[2.109e-04]-0.079***[0.021]-0.005[0.020]-0.403***[0.102]-0.310*[0.165]1.41e-05[4.27e-05]-0.008[0.009]
Yes
Yes
0.000
4667
0.129

0.008**[0.004]-0.016*[0.009]0.007

Female Section
Chief Ratio

At Least One Female
Division Chief[0.010]Female Division
Chief Ratio
Total Female
Employee Ratio(Part-Time + ShortTerm Workers)/Total
Full-Time Permanent
Employees
Log (Assets)
Foreign Ownership
Percentage
Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

Sixth Alternative
Definition of
Deviation from
Seniority-Based Pay
Ratio of Mid-Career
Hires
Year Dummies
IncludedCompany Fixed
Effects Included
p valueObs
R-square-0.017[0.019]0.003[0.007]0.001[0.002]0.005[0.010]0.001***[2.098e-04]-0.079***[0.021]-0.005[0.020]-0.403***[0.102]-0.319*[0.169]7.02e-05[1.132e-04]-0.008[0.009]
Yes
Yes
0.000
4646
0.129

DV: ROA
winsorized atthe .01/99.9
levelIndependent Variable:

0.008**[0.004]-0.013[0.009]0.007

At Least One Female
Section Chief
Female Section
Chief Ratio

At Least One Female
Division Chief[0.010]Female Division
Chief Ratio
Total Female
Employee Ratio(Part-Time + ShortTerm Workers)/Total
Full-Time Permanent
Employees
Log (Assets)
Foreign Ownership
Percentage
Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

Seventh Alternative
Definition of
Deviation from
Seniority-Based Pay
Ratio of Mid-Career
Hires
Year Dummies
IncludedCompany Fixed
Effects Included
p valueObs
R-square-0.017[0.019]0.002[0.007]0.001[0.002]0.005[0.010]0.001***[2.094e-04]-0.080***[0.021]-0.005[0.020]-0.404***[0.102]-0.310*[0.166]-7.76e-05[1.237e-04]-0.009[0.009]
Yes
Yes
0.000
4667
0.129

0.008**[0.004]-0.016*[0.009]0.007[0.010]Female Division
Chief Ratio
Total Female
Employee Ratio(Part-Time + ShortTerm Workers)/Total
Full-Time Permanent
Employees
Log (Assets)
Foreign Ownership
Percentage
Leverage
Foreign Sales Ratio
R&D Intensity
Advertising Intensity

Eighth Alternative
Definition of
Deviation from
Seniority-Based Pay
Ratio of Mid-Career
Hires
Year Dummies
IncludedCompany Fixed
Effects Included
p valueObs
R-square-0.017[0.019]0.002[0.007]0.001[0.002]0.005[0.010]0.001***[2.096e-04]-0.079***[0.021]-0.005[0.020]-0.404***[0.102]-0.317*[0.168]4.12e-05[3.11e-05]-0.008[0.009]
Yes
Yes
0.000
4646
0.129

The following are the definitions of the alternative Deviation from Seniority-Based Pay variables: (First Alternative Definition) Annual Salary regressed on Female, years since school, years since school squared, Female*years since school, Female*years since school squared, tenure, Female*tenure, tenure squared, Female*tenure squared, education, Female*education, company
fixed effect, job title fixed effect and industry*year fixed effect. Then we take the results from that individual-level regression analysis and calculate the standard deviation of the error term divided by the mean of the error term by company-year for each company-year. (Second Alternative Definition) For males only: Annual Salary regressed on years since school, years sinceschool squared, tenure, tenure squared, education, company fixed effect, job title fixed effect and industry*year fixed effect. Then we take the results from that individual-level regression analysis and calculate the standard deviation of the error term divided by the mean of the error term by company-year for each company-year. (Third Alternative Definition) Log(Annual
Salary) regressed on Female, years since school, years since school squared, Female*years since school, Female*years since school squared, tenure, Female*tenure, tenure squared, Female*tenure squared, education, Female*education, company fixed effect, job title fixed effect and industry*year fixed effect. Then we take the results from that individual-level regression
analysis and calculate the standard deviation of the error term divided by the mean of the error term by company-year for each company-year. (Fourth Alternative Definition) For males only: Log(Annual Salary) regressed on years since school, years since school squared, tenure, tenure squared, education, company fixed effect, job title fixed effect and industry*year fixed effect.
Then we take the results from that individual-level regression analysis and calculate the standard deviation of the error term divided by the mean of the error term by company-year for each company-year. (Fifth Alternative Definition) Hourly wage regressed on Female, years since school, years since school squared, Female*years since school, Female*years since schoolsquared, tenure, Female*tenure, tenure squared, Female*tenure squared, education, Female*education, company fixed effect, job title fixed effect and industry*year fixed effect. Then we take the results from that individual-level regression analysis and calculate the standard deviation of the error term divided by the mean of the error term by company-year for each companyyear. (Sixth Alternative Definition) For males only: Hourly wage regressed on years since school, years since school squared, tenure, tenure squared, education, company fixed effect, job title fixed effect and industry*year fixed effect. Then we take the results from that individual-level regression analysis and calculate the standard deviation of the error term divided by themean of the error term by company-year for each company-year. (Seventh Alternative Definition) Log(Hourly wage) regressed on Female, years since school, years since school squared, Female*years since school, Female*years since school squared, tenure, Female*tenure, tenure squared, Female*tenure squared, education, Female*education, company fixed effect, job title
fixed effect and industry*year fixed effect. Then we take the results from that individual-level regression analysis and calculate the standard deviation of the error term divided by the mean of the error term by company-year for each company-year. (Eighth Alternative Definition) For males only: Log(Hourly wage) regressed on years since school, years since school squared,tenure, tenure squared, education, company fixed effect, job title fixed effect and industry*year fixed effect. Then we take the results from that individual-level regression analysis and calculate the standard deviation of the error term divided by the mean of the error term by company-year for each company-year.