Voluntary Disclosure of Workforce Gender Diversity
45 Pages Posted: 10 Jan 2022 Last revised: 26 May 2022
Date Written: May 25, 2022
We examine the managerial incentives to voluntarily disclose the gender diversity of a firm’s workforce. When examining disclosure incentives, one key challenge is the difficulty of observing mangers’ information for nondisclosers. We overcome this challenge by using novel data extracted from employees’ online profiles to infer gender diversity without relying on the availability of firms’ public disclosure. After controlling for industry gender diversity, we find that firms are more likely to disclose gender diversity when women comprise a higher proportion of their workforce. This finding is consistent with managerial incentives to disclose favorable information. However, disclosure is more prevalent in industries with a low proportion of female employees, which is consistent with a higher demand for disclosure when firms operate in a poor gender diversity environment. Regarding the potential benefits of disclosure, we find that disclosing firms (a) enjoy more favorable media coverage of the firm’s diversity and inclusion, and (b) attract a larger number of gender-lens ESG funds investing in the firm’s stock. Disclosing firms with a high proportion of female employees enjoy greater benefits. Overall, our study broadens our understanding of the evolving corporate disclosure landscape by providing evidence on firms’ incentives to disclose the gender diversity of their workforce.
Keywords: voluntary disclosure; workforce gender diversity; corporate social responsibility (CSR), environmental, social, and governance (ESG); CSR ratings; CSR media tone; ESG funds
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