Workplace Diversity and Financial Performance: An Analysis of Equal Employment Opportunity (EEO-1) Data

What is the association between the workforce diversity of publicly traded companies and the financial performance of these companies? We ask this question because there are indications that discrimination in the workplace is pervasive and that this pervasive discrimination is at odds with the best interests of publicly traded companies.

Historically, there have been limited publicly available quantitative data sufficient to allow investors or other stakeholders to compare firms and empirically assess if company diversity supports a company's financial performance. Corporate disclosures of workplace diversity, equity, and inclusion (DEI) programs were primarily anecdotal and qualitative. The lack of quantitative data prevented systematic review and assessment by investors and made securities analysis based on DEI programs, performance attribution, or anything resembling it impossible.

As a result of cultural and investor pressure, many companies have recently released standardized data on the diversity of their workforce to the public. From August 2020 to October 2022, the number of S&P 100 companies releasing Equal Employment Opportunity Component 1 data (EEO-1) forms publicly more than quadrupled. The U.S. Equal Employment Opportunity Commission (EEOC) requires that all companies with 100 or more employees complete the EEO-1 employee information report. Federal contractors with 50 or more employees also must submit this form confidentially to the EEOC. The report includes demographic workforce data, including data by race/ethnicity, sex, and job categories.