Do Diverse Directors Influence DEI Outcomes?

59 Pages Posted: 15 Oct 2022 Last revised: 10 May 2024

See all articles by Wei Cai

Wei Cai

Columbia Business School

Jillian Grennan

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

Lin Qiu

Purdue University

Date Written: May 9, 2024

Abstract

We examine whether greater board diversity is associated with more diverse workforce hiring, equitable pay practices, and 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 more approval of mid-level management. However, we see limited real effects regarding gender and racial pay gaps. Additional findings show board diversity works through allyship and homophily channels. Finally, we examine the extent to which environmental, social, and 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 Grennan, Jillian and Qiu, Lin, Do Diverse Directors Influence DEI Outcomes? (May 9, 2024). Available at SSRN: https://ssrn.com/abstract=4232434 or http://dx.doi.org/10.2139/ssrn.4232434

Wei Cai

Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Jillian Grennan (Contact Author)

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

Berkeley, CA 94720
United States

Lin Qiu

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

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