Diversity Investing

59 Pages Posted: 22 Dec 2015 Last revised: 21 Feb 2017

Alberto Manconi

Bocconi University - Department of Finance

Antonino Emanuele Rizzo

Tilburg University

Oliver G. Spalt

Tilburg University - Department of Finance

Date Written: February 20, 2017

Abstract

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

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

Alberto Manconi

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://mypage.unibocconi.eu/albertomanconi/

Antonino Emanuele Rizzo

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands

Oliver G. Spalt (Contact Author)

Tilburg University - Department of Finance ( email )

Department of Finance
Tilburg University
Tilburg, 5000 LE
Netherlands
+31 13 466 3545 (Phone)

HOME PAGE: http://www.oliverspalt.com

Paper statistics

Downloads
513
Rank
43,130
Abstract Views
1,668