Do Investors Value Corporate Workplace Equality?

Abstract

Using a unique workplace equality measure constructed from big data on online job postings, I show that investors tilt their holdings toward firms with better workplace equality profiles after the unexpected 2020 Black Lives Matter (BLM) movement. For economic mechanisms, my findings are most consistent with updating of investors' future performance beliefs driving the changes in investors' holdings. I document that high-equality firms outperform their peers when public attention to social equality is high. I show that the changes in investor behavior persist over time, suggesting that investors do not reverse their beliefs about workplace equality despite the gradual fading of the 2020 BLM movement. Finally, I show that the changes in investor behavior have real impacts on the appointments of racial minorities to the boards of directors.

Keywords: Workforce Equality, Big Data, ESG Preferences, Investment Decisions, Institutional Investors

JEL Classification: G11, G23, G41, M14