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Does fostering inclusion in the workplace enhance corporate financial performance?

Author

Listed:
  • Ullah, Muhammad
  • Qureshi, Qazi Ghulam Mustafa
  • Ullah, Hameed

Abstract

This paper investigates the impact of workplace inclusion—defined as the procedures organizations implement to integrate everyone in the workplace—on corporate financial performance, examining for the first time its effect on market valuation alongside profitability. We construct a composite, policy-based inclusion measure based on five observable components: flexible working hours, daycare services, disability inclusion, corporate equality index, and HIV/AIDS programs. Using a cross-country panel of 14,387 firm-year observations from 2011 to 2022 and estimating high-dimensional fixed effects regression models, we find that inclusion is positively associated with both firm profitability and market valuation, suggesting that inclusive workplace policies enhance financial performance. However, this relationship varies across national contexts. These findings underscore the strategic value of inclusion, offering practical insights for various stakeholders.

Suggested Citation

  • Ullah, Muhammad & Qureshi, Qazi Ghulam Mustafa & Ullah, Hameed, 2025. "Does fostering inclusion in the workplace enhance corporate financial performance?," Finance Research Letters, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:finlet:v:81:y:2025:i:c:s1544612325007809
    DOI: 10.1016/j.frl.2025.107521
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    More about this item

    Keywords

    Disability inclusion; Diversity and inclusion (D&I); Financial performance; Flexible working hours; Corporate equality; Social exchange theory;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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