The Long-term Performance of Diverse Firms

Porras, David; Psihountas, Debbie; Griswold, Melissa
July 2006
International Journal of Diversity in Organisations, Communities;Jul2006, Vol. 6 Issue 1, p25
Academic Journal
Cumulative abnormal returns and buy-and-hold abnormal returns are computed for a sample of companies recognized by Fortune as the ‘50 Best Companies for Minorities’. These are compared to two benchmarks: the CRSP valueweighted index and portfolios of firms of similar size and book-to-market equity. Returns are also tested in time-series regressions against the Fama and French (1993)three-factor and Cahart (1997)four-factor model. Results show that diverse firms earn higher raw returns. They also earn significantly higher risk-adjusted returns during the year after listing. No significant performance over longer periods of time is found.


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