60 Pages Posted: 12 Dec 2022 Last revised: 13 Jan 2023
Date Written: December 9, 2022
We provide large-sample evidence on whether U.S. publicly traded corporations opportunistically use voluntary disclosures about their commitments to employee diversity. We document significant discrepancies between companies' disclosed commitments and their hiring practices and classify firms that discuss diversity more than their actual employee gender and racial diversity warrants as “diversity washers." We find diversity-washing firms obtain superior scores from environmental, social, and governance (ESG) rating organizations and attract investment from institutional investors with an ESG focus. These outcomes occur even though diversity-washing firms are more likely to incur discrimination violations and pay larger fines for these actions. Our study highlights the consequences of selective ESG disclosures on an important social dimension of employee diversity, equity, and inclusion.
Keywords: Diversity disclosure, Diversity washing, Human capital, Social washing, Environmental, social, and corporate governance (ESG)
JEL Classification: G30, G34, G23, M14
Suggested Citation: Suggested Citation