Comparative Analysis of Racio-Ethnicity and Gender Impact on Stock Risk

Comparative Analysis of Racio-Ethnicity and Gender Impact on Stock Risk

J. R. Smith, Andrea Tillman-Hawkins, Alisa L. Mosley, Jean-Claude Assad
Copyright: © 2017 |Pages: 28
DOI: 10.4018/978-1-5225-1933-1.ch054
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Abstract

The study purpose is to examine the relationship between cultural diversity and firm performance from the perspective of the investors. Stock values were used to test the hypothesized relationships between the components of cultural diversity (i.e. racio-ethnicity and gender impact on firm performance) using an event study methodology with regression analysis techniques. The findings indicate that the influences of racio-ethnicity and gender diversity on firm performance were mixed. However, significant relationships were found between the components of cultural diversity and firm performance. New directions for future research are offered.
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Research Problem

This study will investigate the impact of cultural diversity on firm stock performance. The effect of racio-ethnicity and gender diversity on firm performance from the external perspective of shareholders (i.e., investors) was examined in this study.

More specifically, this study was conducted to determine how investors responded to the cultural diversity activities of the firm through the change in firm stock values. Hence, the major research questions are:

  • 1.

    Do the components of cultural diversity (i.e., racio-ethnicity and gender diversity) have an impact on firm performance?

  • 2.

    Does gender diversity or racio-ethnicity have an influence on firm performance?

  • 3.

    Do stock values respond differently to cultural diversity announcements on the day of the announcement and during the post-announcement periods?

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