Tokenism in Gender Diversity among Board of Directors

This study examines the existence of tokenism in Japanese companies after the implementation of corporate governance reforms. We focus on the appointment of female outside directors. The existence of tokenism in corporate boards is an important issue for companies worldwide because it deals with gender diversity in the appointment of board members. Following the Abenomics policy of empowering women, Japan introduced ``Japan's Corporate Governance Code'' (the Code), which included board reforms such as appointing at least two outside directors. Using a quasi-natural experiment, we examine whether tokenism occurs in Japan, a country with a low female participation level in business. Empirical analysis reveals the occurrence of tokenism at the start of the Code¡Çs introduction. Companies appoint two outside directors to meet the formal requirements of the Code. They appoint a male outside director first and a female director later as a token. However, tokenism is not observed when busy female directors with a lot of experience are appointed to the board because they presumably have the expertise and skill.