Navigating the political winds: the role of firm-level political sentiment on the hiring of chief diversity officers

Purpose This study investigates how firm-level political sentiment influences Chief Diversity Officer (DO) appointments in publicly traded firms, examining whether heightened sociopolitical pressures produce authentic organizational transformation or symbolic responses that satisfy external legitimacy demands without substantive change. Design/methodology/approach Using S&P 500 firms, we combine text-based political sentiment measures from earnings calls with original data on DO characteristics, including race, gender, political affiliation and experience. Probit regressions test associations between political sentiment and DO appointments. Robustness analyses examine DO tenure, experience levels and acquired diversity traits to distinguish symbolic appointments from substantive commitments. Findings Firms with higher political sentiment are significantly more likely to appoint DOs, particularly those who are Black, female or Democrat-affiliated, suggesting responsiveness to external legitimacy pressures. However, the absence of a relationship between political sentiment and acquired diversity traits (e.g. international experience) and evidence of shorter tenures among DOs in high-sentiment firms indicate that many appointments may be symbolic rather than substantive. Originality/value By integrating Institutional Theory, Legitimacy Theory, Stakeholder Theory and Upper Echelons Theory, we explain how sociopolitical pressures translate into organizational structures and when responses become symbolic versus substantive. We advance understanding of decoupling mechanisms in diversity governance, demonstrating how firms strategically emphasize ceremonial characteristics while limiting substantive organizational transformation.