Fortune's 50 Best Companies for Minorities: Does Diversity Pay?

24 Pages Posted: 31 Jan 2005

See all articles by Melissa Griswold

Melissa Griswold

Quincy University

David Porras

Webster University

Brad G. Scott

Webster University

Date Written: January 31, 2005

Abstract

This paper investigates the relationship between racial diversity and financial performance. Annually, Fortune magazine publishes a list of the "50 Best Companies for Minorities". We compare the accounting profitability of firms appearing on the list to two benchmarks: 1) A set of firms matched by industry, size, and prior performance; and 2) Value-weighted industry averages. Results indicate that the companies recognized by Fortune as minority friendly, are strong financial performers. However, superior performance cannot be linked to diversity initiatives. Fortune firms outperform benchmarks as early as three years prior to recognition. While, there is some indication of relative improvement in the years leading up to and immediately following listing, no significant difference is found between the sample and benchmarks five years after listing.

Keywords: Operating performance, racial diversity, corporate diversity

JEL Classification: G39, J15, M12, M54

Suggested Citation

Griswold, Melissa and Porras, David and Scott, Brad G., Fortune's 50 Best Companies for Minorities: Does Diversity Pay? (January 31, 2005). Available at SSRN: https://ssrn.com/abstract=657262 or http://dx.doi.org/10.2139/ssrn.657262

Melissa Griswold

Quincy University ( email )

1800 College Avenue
Quincy, IL 62301-2699
United States

David Porras (Contact Author)

Webster University ( email )

470 E. Lockwood Ave.
St. Louis, MO 63119
United States

Brad G. Scott

Webster University ( email )

470 E. Lockwood Ave.
St. Louis, MO 63119
United States

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