Diversity at the Top: How Ethnic Composition of Management Influences Corporate Performance in U.S. Companies

This paper aims to investigate the impact of ethnic diversity among employees and managers on firm performance, focusing on return on assets and return on equity. The analysis is conducted on a sample of 391 U.S. companies over a five-year period, 2020–2024. The quantitative framework includes a wide range of indicators related to financial performance, ethnic diversity among employees, ethnic categories of managers, and other control variables. The research methodology employs the ordinary least squares (OLS) method to highlight these effects, using fixed-effects and random-effects regression models, both linear and nonlinear. By estimating the regression models, the empirical results support the hypotheses established in the current state of the literature, indicating that ethnic diversity affects firm performance in a mixed manner, with both positive and negative effects on ROA and ROE. These findings are particularly relevant for practitioners, given the need to integrate minority representation into performance assessment, risk evaluation, and decision-making processes. Furthermore, regarding the female component within firms, this dimension contributes to the promotion of sustainability and a sound ESG-oriented approach. Consequently, social factors such as ethnicity can influence companies’ financial performance and shape how firms are perceived by investors.

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Publication Details

Journal
Journal of risk and financial management
Published
2026-02-03
DOI
https://doi.org/10.3390/jrfm19020114
Primary Topic
Gender Diversity and Inequality
Type
article
Field-Weighted Citation Impact
0.00
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article

Diversity at the Top: How Ethnic Composition of Management Influences Corporate Performance in U.S. Companies

Silvia-Andreea Peliu
Journal of risk and financial management
Gender Diversity and Inequality
article

Diversity at the Top: How Ethnic Composition of Management Influences Corporate Performance in U.S. Companies

Silvia-Andreea Peliu
article en

Abstract

This paper aims to investigate the impact of ethnic diversity among employees and managers on firm performance, focusing on return on assets and return on equity. The analysis is conducted on a sample of 391 U.S. companies over a five-year period, 2020–2024. The quantitative framework includes a wide range of indicators related to financial performance, ethnic diversity among employees, ethnic categories of managers, and other control variables. The research methodology employs the ordinary least squares (OLS) method to highlight these effects, using fixed-effects and random-effects regression models, both linear and nonlinear. By estimating the regression models, the empirical results support the hypotheses established in the current state of the literature, indicating that ethnic diversity affects firm performance in a mixed manner, with both positive and negative effects on ROA and ROE. These findings are particularly relevant for practitioners, given the need to integrate minority representation into performance assessment, risk evaluation, and decision-making processes. Furthermore, regarding the female component within firms, this dimension contributes to the promotion of sustainability and a sound ESG-oriented approach. Consequently, social factors such as ethnicity can influence companies’ financial performance and shape how firms are perceived by investors.

Journal of risk and financial managementVol. 19(2)
Bucharest University of Economic Studies (RO)
Gender equality
Openalex Percentile: Top 71%
Gender Diversity and Inequality
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