Tech companies used to be tight-lipped about the gender breakdowns of their employees. Some even argued that such information was a trade secret.
But in recent years, that trend has reversed. Google, Facebook, Apple, and many other tech firms have released diversity reports, which show that the fraction of women ranges from about one-sixth of workers to nearly half.
These reports got Thomas Lys, a professor emeritus of accounting information and management at Kellogg, and collaborators wondering: Do the investors who read these
(Image credit – Lisa Röper/Kellogg Insight)
reports value gender diversity? “Our focus was: Can you make a business case for diversity?” says Lys. If so, then reports revealing relatively high diversity should boost stock prices more than those revealing low diversity.
That’s exactly the pattern that emerged in a study of technology and finance companies, conducted by Lys and his colleagues. When companies reported a higher percentage of women, investors appeared to reward them with larger increases in stock value.
The magnitude of the effect is “surprisingly large,” Lys says. For example, the researchers estimate that if the share of women at Google had been one percentage point higher when the firm released its diversity report in 2014, the company’s market capitalization would have been about $375 million higher at the end of the day of the announcement.
For Lys, the message is clear. “Investors value gender diversity, that’s for sure,” he says. “They value it very strongly.”
Read the full article at Kellogg Insight.
