The Rise of Conscious Consumers : The Cash Flow Implications of Corporate Workplace Equality

We construct a corporate workplace equality measure based on textual analysis of equal employment opportunity statements in online job postings of US listed companies. We verify this measure by demonstrating its predictive power of future employment discrimination lawsuits and identifying the cost that deters low-equality firms to mimic high-equality peers. Based on this measure, we show that US households spend more on products produced by firms with higher corporate workplace equality and this pattern is stronger among households of racial or gender minorities. We establish the causality by taking advantage of quasi-exogenous social events, such as the MeToo movement in 2017, the passage of California Gender Board Diversity Law in 2018, and the Black Lives Matter movement in 2020. Overall, our study reveals direct cash flow implications of corporate workplace equality in the product market and establishes a clear economic channel where consumer ESG preference is transformed into cash flow risk