Study Finds Hiring a Black CEO Can Boost a Firm’s Stock Price

Hiring a Black CEO can lead to a significant financial benefit for companies, according to a new study from researchers at the Stevens Institute of Technology in Hoboken, New Jersey, and the University of Georgia.

Researchers analyzing nearly 5,000 CEO appointments over 20 years, from 2001-2020, found average stock prices went up when companies announced the appointment of a Black CEO. The findings from this large-scale study suggests a median firm appointing a Black CEO could see a boost of $44.6 million in market capitalization relative to a similar firm appointing a White CEO.

Why the gain? Ann Mooney Murphy, a co-author of the study and an associate professor in the Stevens School of Business explained, “Our study suggests that Black CEOs face a higher bar for advancement than White CEOs as they climb the corporate ladder, resulting in Black CEOs being that much more prepared to lead the firm. For example, the Black CEOs in our study had more years of education, a greater number of advanced degrees, and a higher likelihood of being educated at elite universities.”

“Some might view our study as all positive news. It’s not,” said study lead author Seung-Hwan Jeong, an assistant professor in the management department at UGA’s Terry College of Business. Of the nearly 5,000 CEO appointments studied, only 57 of the appointments went to a Black executive.

“While it is encouraging that markets recognize the strong qualities of Black CEOs, our study also suggests that firms seemingly appoint Black CEOs only when they are excessively qualified,” Dr. Jeong noted. “Thus, we likely have Black executives who would do quite well who simply are never given the chance to lead an organization.”

The full study, “How Do Investors Really React to the Appointment of a Black CEO?” was published on the website of the Strategic Management Journal. It may be accessed here.


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