The Effect of Diversity on Shareholder Value: Do Gender, Ethnic and CSR Diversity Initiatives Influence Shareholder Value?

Abstract

There exist many studies that explore the relationship between diversity (age, gender, ethnicity, education etc.) and firm performance. This study builds upon these and extends the research by examining the effects of gender diversity, ethnic diversity, and CSR related diversity measures on the shareholder value of a firm. Using data from North American firms, the central question that this paper examines is whether gender, ethnic and CSR related diversity initiatives have a positive effect on shareholder value. The study accounts for endogeneity effects using interaction effects as well as controlling for fixed firm and year effects. It finds that gender diversity in leadership (CEO positions and board members) has a positive effect on shareholder value and ethnic diversity in leadership (board members) has a positive effect on shareholder value. It also finds that CSR related diversity initiatives have a negative effect on shareholder value. All of these results are statistically insignificant.