When markets blink: US stock price responses to the appointment of minority leaders

Abstract

This study examines whether the appointment of racial/ethnic minorities into top management positions has a different impact on share price than the appointment of members of the racial/ethnic majority into equivalent positions. Our dependent variable is the degree of change in share price following the announcement of minority and majority men into senior management positions. Market reaction to the naming of minorities into corporate leadership positions is significant and negative while the market's reaction to the naming of members of the racial/ethnic majority is significant and positive. Our findings suggest that racial/ethnic integration of corporate hierarchies may be impeded as investor reaction increasingly drives firm-level governance decisions.