Social Washing or Credible Communication? An Analysis of Corporate Disclosures of Diversity, Equity, and Inclusion in 10-K Filings

55 Pages Posted: 18 Oct 2022 Last revised: 24 Feb 2024

See all articles by Nathan C. Goldman

Nathan C. Goldman

North Carolina State University - Department of Accounting

Yuan Zhang

University of Texas at Dallas

Date Written: February 12, 2024

Abstract

Starting in 2020, the SEC requires firms to disclose human capital information material to their operations in their annual filings. Many firms discuss their commitment to employee-level diversity, equity, and inclusion (DEI) in their human capital disclosures, representing the first time that firms disclose DEI-related information at the employee level in regulatory annual filings. We examine whether these disclosures reflect credible communication about a firm’s commitment to DEI or merely reflect social washing. We find that these firm-provided DEI disclosures are associated with higher employee ratings on DEI. Consistent with the positive economic implications of committing to DEI, the DEI disclosures are also associated with higher employee productivity. In additional analysis, we find that the market responds positively to disclosures of DEI commitment for firms less likely to be social washing. Our findings provide novel evidence on the credibility and the informativeness of the new DEI disclosures, suggesting that firms, on average, credibly communicate their commitment to DEI in the 10-K human capital disclosures.

Keywords: Human Capital Disclosure; Diversity, Equity, & Inclusion; Social Washing; Employee Productivity; Employee DEI Ratings

JEL Classification: G14, M14, M41, M54

Suggested Citation

Goldman, Nathan C. and Zhang, Yuan, Social Washing or Credible Communication? An Analysis of Corporate Disclosures of Diversity, Equity, and Inclusion in 10-K Filings (February 12, 2024). Available at SSRN: https://ssrn.com/abstract=4244954 or http://dx.doi.org/10.2139/ssrn.4244954

Nathan C. Goldman (Contact Author)

North Carolina State University - Department of Accounting ( email )

Raleigh, NC 27695-8113
United States

Yuan Zhang

University of Texas at Dallas ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

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