Diversity Investing

Category: Finance Seminar
When: 06 December 2016
, 16:15
 - 17:30

Based on a sample of more than 70,000 top executives in U.S. rms from 2001 to 2014,
we show that top management team diversity { a new text{based measure of how diverse
managers are in terms of personal characteristics and prior experiences { matters for stock
returns. Diversity investing, i.e., going long rms with diverse management teams and short
rms with homogenous teams, yields comparable returns, but higher Sharpe ratios, than
most leading asset pricing anomalies over our sample period. Returns are driven by large-
cap stocks and the long leg of the strategy. Potential sources include greater pro tability
of diverse rms and mispricing by unsophisticated investors.