IDEAS home Printed from https://ideas.repec.org/a/spr/joerap/v7y2024i1d10.1007_s41996-023-00132-0.html
   My bibliography  Save this article

Does Greater Diversity in Executive Race/Ethnicity Reliably Predict Better Future Firm Financial Performance?

Author

Listed:
  • Sekou Bermiss

    (UNC Chapel Hill)

  • Jeremiah Green

    (Texas A&M University)

  • John R. M. Hand

    (UNC Chapel Hill)

Abstract

In contrast to the equivocal findings in academic research, “the business case for diversity” is the dominant rhetorical paradigm for how US corporations debate actions and policies around racial/ethnic diversity. In this paper, we conduct an empirical test of the paradigm by gathering data on the race/ethnicity of the individuals shown on the leadership pages of S&P 500 firms’ websites as of mid-2011, 2014, 2017, 2020, and 2021, and then determining if any of nine measures of the racial/ethnic diversity of these executives reliably predict cross-sectional variation in any of six measures of their firms’ financial performance over the next fiscal year. We do not find reliable evidence that they do. As such, our results do not support the “business case for diversity” when the claim is assessed using 1-year-ahead financial performance metrics and multiple measures of the race/ethnicity of S&P 500 executives over the last decade.

Suggested Citation

  • Sekou Bermiss & Jeremiah Green & John R. M. Hand, 2024. "Does Greater Diversity in Executive Race/Ethnicity Reliably Predict Better Future Firm Financial Performance?," Journal of Economics, Race, and Policy, Springer, vol. 7(1), pages 45-60, March.
    • Handle: RePEc:spr:joerap:v:7:y:2024:i:1:d:10.1007_s41996-023-00132-0
    DOI: 10.1007/s41996-023-00132-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41996-023-00132-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41996-023-00132-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Karen A. Bantel & Susan E. Jackson, 1989. "Top management and innovations in banking: Does the composition of the top team make a difference?," Strategic Management Journal, Wiley Blackwell, vol. 10(S1), pages 107-124, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meghamrita Chakraborty, 2023. "Linking Migration, Diversity and Regional Development in India," Journal of Development Policy and Practice, , vol. 8(1), pages 55-72, January.
    2. Patzelt, Holger & zu Knyphausen-Aufseß, Dodo & Fischer, Heiko T., 2009. "Upper echelons and portfolio strategies of venture capital firms," Journal of Business Venturing, Elsevier, vol. 24(6), pages 558-572, November.
    3. Auh, Seigyoung & Menguc, Bulent & Fisher, Michelle & Haddad, Abeer, 2011. "The perceived autonomy–perceived service climate relationship: The contingency effect of store-level tenure diversity," Journal of Retailing and Consumer Services, Elsevier, vol. 18(6), pages 509-520.
    4. Tleubayev, Alisher & Bobojonov, Ihtiyor & Gagalyuk, Taras & Glauben, Thomas, 2020. "Board gender diversity and firm performance: Evidence from the Russian agri-food industry," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 23(1), pages 35-53.
    5. Olson, Bradley J. & Bao, Yongjian & Parayitam, Satyanarayana, 2007. "Strategic decision making within Chinese firms: The effects of cognitive diversity and trust on decision outcomes," Journal of World Business, Elsevier, vol. 42(1), pages 35-46, March.
    6. Pierpaolo Parrotta & Dario Pozzoli & Mariola Pytlikova, 2014. "The nexus between labor diversity and firm’s innovation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 303-364, April.
    7. Marte C.W. Solheim & Ron Boschma & Sverre Herstad, 2018. "Related variety, unrelated variety and the novelty content of firm innovation in urban and non-urban locations," Papers in Evolutionary Economic Geography (PEEG) 1836, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Oct 2018.
    8. Nicodemus M. Mutinda & James M. Kilika, 2019. "TMT Cognitive Capability and Organizational Outcomes: A Theoretical Review," International Business Research, Canadian Center of Science and Education, vol. 12(8), pages 31-52, August.
    9. Nadia Loukil & Ouidad Yousfi, 2022. "Do CEO’s traits matter in innovation outcomes?," Journal of International Entrepreneurship, Springer, vol. 20(3), pages 375-403, September.
    10. Berger, Allen N. & Kick, Thomas & Schaeck, Klaus, 2014. "Executive board composition and bank risk taking," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 48-65.
    11. H. Mahesh Prabhu & Amit Kumar Srivastava, 2023. "CEO Transformational Leadership, Supply Chain Agility and Firm Performance: A TISM Modeling among SMEs," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 24(1), pages 51-65, March.
    12. Li, Yung-Ming & Lee, Yi-Lin, 2010. "Pricing peer-produced services: Quality, capacity, and competition issues," European Journal of Operational Research, Elsevier, vol. 207(3), pages 1658-1668, December.
    13. Khalfallah, Fatma & Necib, Adel, 2020. "Bank credit risk and performance: the case of Tunisian banks during the period 2005 – 2015," MPRA Paper 109506, University Library of Munich, Germany.
    14. Ho‐Uk Lee & Jong‐Hun Park, 2008. "The Influence of Top Management Team International Exposure on International Alliance Formation," Journal of Management Studies, Wiley Blackwell, vol. 45(5), pages 961-981, July.
    15. Jui-Chung Kao & Hsiang-Yu Ma & Nein-Tsu Chiang & Rui-Hsin Kao & Cheng-Chung Cho, 2021. "How to Establish a Sustainable Organization? A Study on the Relationship between Social Work Characteristics and Innovativeness for Employees of Organizations," Sustainability, MDPI, vol. 13(11), pages 1-18, June.
    16. Paola Rovelli & Vincenzo Butticè, 2020. "On the organizational design of entrepreneurial ventures: the configurations of the entrepreneurial team," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(2), pages 243-269, June.
    17. David R. Williams & Betty S. Coffey & Carlton C. Young, 2018. "Human capital and agency effects on CEO compensation of IPO biopharmaceutical firms and the market’s response," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(2), pages 315-337, June.
    18. Malovaná, Simona & Hodula, Martin & Gric, Zuzana & Bajzík, Josef, 2023. "Macroprudential policy in central banks: Integrated or separate? Survey among academics and central bankers," Journal of Financial Stability, Elsevier, vol. 65(C).
    19. Jia Li & Noah Lim & Hua Chen, 2020. "Examining Salesperson Effort Allocation in Teams: A Randomized Field Experiment," Marketing Science, INFORMS, vol. 39(6), pages 1122-1141, November.
    20. Hutzschenreuter, Thomas & Horstkotte, Julian, 2013. "Performance effects of international expansion processes: The moderating role of top management team experiences," International Business Review, Elsevier, vol. 22(1), pages 259-277.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joerap:v:7:y:2024:i:1:d:10.1007_s41996-023-00132-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.