Study Finds That Financial Analysts Discount the Educational Backgrounds of Black Executives Who Graduated from Prestigious Universities

A new study appearing in Organization Science, the journal of the Institute for Operations Research and Management Science, finds that financial analysts who rate management teams at large companies discount the educational backgrounds of black executives who graduated from prestigious colleges and universities. At the same time, white managers with prestigious educational backgrounds are singled out.

In an experiment, the authors of the article submitted company data to financial analysts which included the educational background of the executive team. Photographs of the executives were included in the information so that the analysts could surmise the race of the executives. The results showed that for companies with similar financial prospects, firms with white executives with prestigious educational backgrounds were projected to have high stock price gains. The lowest projected stock price gains were given to firms with black executives with prestigious educational backgrounds.

The authors concluded that the financial analysts assumed that the black executives were admitted to the prestigious educational institution under an affirmative action program and therefore they were not perceived as talented or as capable as white executives with similar educational backgrounds.

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