Competition for Thematic Equity Index Inclusion and Workforce Gender Diversity

We show that competition for thematic equity index inclusion can influence corporate social behavior—specifically, workforce gender diversity—leveraging Japan’s adoption of MSCI’s Empowering Women Index (WIN) in 2017. Supported by the Government Pension Investment Fund, the index promotes gender diversity by selecting firms that meet specific criteria. Using a difference-in-differences approach, we find that firms seeking inclusion increase women’s workforce participation, particularly in managerial positions. These firms also reduce overtime and expand paternity leave, reflecting a shift in corporate culture. Firms ultimately added to the index experience positive stock market reactions and greater institutional ownership. These findings underscore the capacity of purpose-driven equity indices to drive meaningful changes in corporate social behavior.