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CEOs Who Are All Talk and No Action on Inclusion Still Benefit

So-called diversity-washing attracts investors to companies even when hiring results lag, study shows.

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Illustration: Jim Stoten for Bloomberg Businessweek

Corporate leaders who talk the most about diversity may benefit from greater investment in their companies by socially conscious funds, even if hiring and promotion efforts are lackluster. The biggest braggarts may benefit the most from what researchers call “diversity-washing.”

Those are the conclusions of a study of almost all US public companies from 2008 to 2021 by researchers at Stanford University and three other universities. “It’s hard to have a real debate about this unless companies disclose what they really look like,” says David Larcker, the director of the Corporate Governance Research Initiative at Stanford and one of the study’s authors. “It seems like you want real numbers, real data, as opposed to kind of really loose discussion around it.”