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In August 2020, the Securities and Exchange Commission announced a new rule requiring public companies to disclose any “human capital resources” material to their operations. The mandate left it up to individual companies to decide exactly what that meant.
Jung Ho Choi, an assistant professor of accounting at Stanford Graduate School of Business, was curious to see how many companies would interpret the rule as a call to reveal more information about the diversity of their workforces. What he found surprised him.
In the six months after the rule went into effect, less than one-fifth of public corporations disclosed metrics about their rank-and-file employees’ gender or race in their annual reports to the SEC. “Only 17% of the companies disclosed this information,” Choi says. That made him wonder what potential employees think about the lack of diversity data. “I thought, ‘Let’s take a step back and ask: How much do people value this information?’”
Choi recently tackled this question with a field experiment using online job listings. The results suggest that a majority of people looking for work care about potential employers’ demographics and diversity. In fact, most care enough about it so much that they’re willing to sacrifice a higher salary to consider working at a more inclusive company. The findings are detailed in a new paper Choi coauthored with Joseph Pacelli of Harvard Business School, Kristina Rennekamp of Cornell, and Sorabh Tomar of Southern Methodist University.
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