Do Diverse Directors Influence DEI Outcomes?

65 Pages Posted: 15 Oct 2022

See all articles by Wei Cai

Wei Cai

Columbia University - Columbia Business School

Aiyesha Dey

Harvard Business School

Jillian Grennan

Santa Clara University, Leavey School of Business; Santa Clara University School of Law; University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Joseph Pacelli

Harvard University - Business School (HBS)

Lin Qiu

Purdue University - Krannert School of Management

Date Written: September 28, 2022

Abstract

We examine whether greater board diversity is associated with more diverse workforce hiring, more equitable pay practices, and more inclusive corporate cultures. Using a variety of quasi-experimental designs, we document increases in managerial and staff diversity in the years following a diverse director's appointment, consistent with diversity initiatives ``trickling down'' within a firm. We also find that employees perceive improvements in the culture, stronger community-building norms, and approve more of senior management. We, however, see limited real effects in terms of gender and racial pay gaps. Additional findings show board diversity works through allyship, homophily, and cognitive diversity channels. Finally, we examine the extent to which environmental, social, governance (ESG) ratings capture these within-firm social gains and document discrepancies.

Keywords: Corporate Governance, Board of Directors, Board Diversity, Gender, Corporate Culture, Ethnicity, Diversity, Equity, Inclusion, and Belonging, Institutional investors, Shareholder activism

JEL Classification: G32, G24, G28, J48, J20, M12, M14

Suggested Citation

Cai, Wei and Dey, Aiyesha and Grennan, Jillian and Pacelli, Joseph and Qiu, Lin, Do Diverse Directors Influence DEI Outcomes? (September 28, 2022). Available at SSRN: https://ssrn.com/abstract=4232434 or http://dx.doi.org/10.2139/ssrn.4232434

Wei Cai

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Aiyesha Dey

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Jillian Grennan (Contact Author)

Santa Clara University, Leavey School of Business ( email )

Santa Clara, CA 95053
United States

Santa Clara University School of Law ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Berkeley, CA 94720
United States

Joseph Pacelli

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

Lin Qiu

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

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