Black Boards Matter. Diversity premium during social uprising

Abstract

During the period of the increased public attention to racial discrimination marked by the Black Lives Matter protests, firms with at least one Black director on the board earned abnormal returns of 3.59% over 6 days. This is true only if the firm is headquartered in states with a low fraction of the Black population. My evidence aligns with the hypothesis that the market particularly rewards intentional racial diversification, which exceeds the demographic composition of the state.