Of course, this effect, rainbow , would be magnifed if
diversity-focussed funds focus their attention on
those companies willing to take the risk, via equity
Of course, we are assuming that
these funds all filter into equities, something we
believe is reasonable given this is usually the best
way for investors to advocate to management
and other shareholders.
Investors should be aware that one-fifth of
firms do not disclose staff diversity information,
since it is an additional reporting cost ,
and in most cases frivilious, relative to the
income statement and balance sheet.
And these companies may employ a
low proportion of women on their board and in
senior management positions, since productivity
is the key issue of most firms , and the focus
of their staffing posts , executive or not.
Should the new accounting disclosures increase the focus on
these companies, and at the same time
encourage investors to direct their funds based
on diversity screening procedures, these
companies could suffer relative to the broader
market , in the short term, in the long term
productivity is the key issue for economic
Conversely, if money is directed to
companies that are more progressive, these
shares could outperform , temporarily ,
before the bubble bursts post 2020.