Diversity Breeds Diversity : Evidence from CEOs’ Early-Life Experiences

Diversity and inclusion (D&I) is becoming an essential factor for many workers. Yet, little is known about what drives the significant variation in firm D&I. This paper identifies CEOs' early-life exposure to community diversity as an important factor associated with more D&I policies, more women among the top-paid executives, more minority and female employees, and a lower probability of facing employee discrimination. Supporting a more causal interpretation, the diversity exposure effects depend on the level of integration in the CEO's community while growing up, and the CEO's control over firm policies. Moreover, using a difference-in-differences specification around plausibly exogenous CEO turnovers, to address the endogenous matching of CEOs to firms, provides consistent results