Diversity, Equity, and Inclusion

Diversity, Equity, and Inclusion

Alex Edmans, Caroline Flammer, Simon Glossner

Series number :

Serial Number: 
913/2023

Date posted :

May 02 2023

Last revised :

September 05 2023
SSRN Share

Keywords

  • DEI • 
  • diversity • 
  • equity • 
  • inclusion • 
  • ESG • 
  • CSR • 
  • responsible business

This paper measures diversity, equity, and inclusion (DEI) using proprietary data on survey responses used to compile the Best Companies to Work For list. We identify 13 of the 58 questions as being related to DEI, and aggregate the responses to form our DEI measure.

This variable has low correlation with gender and ethnic diversity in the boardroom, in senior management, and within the workforce, suggesting that DEI captures additional dimensions missing from traditional measures of demographic diversity. DEI is also unrelated to general workplace policies and practices, suggesting that DEI cannot be improved by generic initiatives. However, DEI is higher in small growth firms and firms with high financial strength. DEI is associated with higher future accounting performance across a range of measures, higher future earnings surprises, and higher valuation ratios, but demographic diversity is not. DEI perceptions among professional workers, such as R&D employees, are significantly correlated with the number and quality of patents. However, DEI exhibits no link with future stock returns.

Authors

Real name:
Simon Glossner