The Political Economy of Diversity, Equity, and Inclusion

We analyze the text of 1,694,664 securities disclosures for 15,105 publicly traded companies to understand the political forces behind the rise and fall of corporate commitments to diversity, equity, and inclusion (DEI) in the United States. Starting with the rise, we find that the ideological composition of corporate leadership was a strong and persistent predictor of DEI commitments, which we argue reflects a plausible causal relationship. Ownership by the "Big Three" asset managers was also associated with corporate DEI commitments, both within and across firms, during the era when these investors vocally supported DEI. Presidential politics appears to have contributed to the fall: federal contractors pulled back more in 2025, consistent with the new administration targeting contractor DEI programs. However, the retreat was broad, suggesting the importance of larger political, legal, and social forces. Our results underscore the importance of corporate governance for the study of political economy.