The Challenges of Diversity Investing
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- Both academic research and our own experience indicate that the business case for corporate diversity is compelling as a result of higher collective intelligence.
- Testing the investment case for greater diversity faces two major challenges: insufficient historical data and difficulty in measuring whether the culture is one that embraces dissenting views among the team.
- Accordingly, we conclude that investors who seek to promote diversity and its business benefits would be well served to combine diversity with known drivers of excess returns.