Diversity increasing a company’s long-term value
DEI initiatives (diversity, equity, inclusion) are of strategic importance to increase a company’s long-term market valuation and innovation. The positive link between DEI and innovation suggests that inclusive environments that integrate differences can foster creativity and competitive advantages, according to a research report from the Inclusion Initiative at London School of Economics and Political Science (LSE) focusing on diversity and productivity.
“While DEI appears unrelated to short-term financial metrics like stock returns and profitability, the positive link between DEI and innovation suggests that inclusive environments that integrate differences can foster creativity and competitive advantage.”
The research has found that an increase in DEI comes with higher market long-term valuations and growth expectations. However, this is not associated with stock returns.
“This indicates that while higher DEI may boost the firm’s perceived long-term value, they do not significantly impact short-term financial performance as measured by stock returns”, the report says.
“DEI shows a statistically insignificant association with Return on Equity (ROE), suggesting that higher DEI does not adversely affect profitability.”
The report says that DEI is positively associated with the number of patents, suggesting that a diverse and inclusive workforce may contribute to enhanced innovation output over time.
Moonshot News is an independent European news website for all IT, Media and Advertising professionals, powered by women and with a focus on driving the narrative for diversity, inclusion and gender equality in the industry.
Our mission is to provide top and unbiased information for all professionals and to make sure that women get their fair share of voice in the news and in the spotlight!
We produce original content, news articles, a curated calendar of industry events and a database of women IT, Media and Advertising associations.
