59 Pages Posted: 22 Dec 2015 Last revised: 21 Feb 2017
Date Written: February 20, 2017
Top management team diversity matters for stock returns. We develop a new text-based measure of team diversity and apply it to a sample of over 70,000 top executives in U.S. firms from 2001 to 2014. Buying firms with diverse teams and selling firms with homogenous teams (a strategy we call "diversity investing"), outperforms most leading asset pricing anomalies over our sample period on a value-weighted basis. Two drivers of diversity returns are greater profitability of diverse firms and mispricing by unsophisticated investors.
Keywords: Behavioral Finance, Top Management Teams, Anomalies, Diversity
Suggested Citation: Suggested Citation
Manconi, Alberto and Rizzo, Antonino Emanuele and Spalt, Oliver G., Diversity Investing (February 20, 2017). Available at SSRN: https://ssrn.com/abstract=2706550 or http://dx.doi.org/10.2139/ssrn.2706550