Report: when companies hire black ceos, stocks jump

by DEREK MAJOR October 12, 2022 ------------------------- According to a study published in The Strategic Management Journal (SMJ), market reactions to the appointments of Black CEOs are

more favorable than white CEOs. _The Washington Post_ reports that SMJ researchers reviewed thousands of CEO appointments between 2001 and 2021. The study showed a medium-sized firm that

appointed a Black executive saw a 3.1% increase in market capitalization within three days of the announcement. Two of the researchers who conducted the study, SEUNG-HWAN JEONG and ANN

MOONEY MURPHY, say the increase is the result of investor calm with Black executives whose résumé is often better than their white counterparts. “To be considered for appointment as CEO, a

Black executive would have to repeatedly prove themselves over the course of their careers in ways white CEOs do not,” the researchers wrote, according to the _Post_. “As a result, newly

appointed Black CEOs are likely to exhibit exceptional attributes relative to their white counterparts.” While the appointment of a Black CEO has its benefits, they’re also few and far

between. According to Investopedia, there are just nine Black CEOs in the U.S., including six representing Fortune 500 companies. Current Black CEOs include ROSALIND BREWER of Walgreens

Boots Alliance, MARVIN ELLISON of Lowe’s, and THASUNDA BROWN DUCKETT of the TIAA. Because there are so few Black CEOs in the U.S., the ones that do exist are typically more qualified than

white CEOs. The researchers found that 93% of Black CEOs in the study have advanced degrees compared to 53% of white CEOs. The study also found, on average, Black corporate leaders have an

additional 1.6 years of education than white CEOs and are more likely to have an elite degree from a top university, showing just how far Black business leaders have to go to get into

corporate board rooms. AYANA PARSONS, a senior partner at Korn Ferry who works in CEO Inclusion, told the Post that Black CEOs often outperform their white counterparts because they’re often

judged on performance rather than their potential. Parsons also added that companies and corporate boards can’t just go out and hire Black corporate executives. To grow the number of Black

executives, companies need to create a pipeline ensuring Black employees have the support to grow and advance their careers. That’s starting to happen as tech companies, including Apple and

Microsoft, have launched partnerships with HBCU schools. Companies in the health industry, including Gilead Sciences and Novartis, have also partnered with HBCU schools.