Diversity at the Top: How Ethnic Composition of Management Influences Corporate Performance in U.S. Companies

This paper aims to investigate the impact of ethnic diversity among employees and managers on firm performance, focusing on return on assets and return on equity. The analysis is conducted on a sample of 391 U.S. companies over a five-year period, 2020–2024. The quantitative framework includes a wide range of indicators related to financial performance, ethnic diversity among employees, ethnic categories of managers, and other control variables. The research methodology employs the ordinary least squares (OLS) method to highlight these effects, using fixed-effects and random-effects regression models, both linear and nonlinear. By estimating the regression models, the empirical results support the hypotheses established in the current state of the literature, indicating that ethnic diversity affects firm performance in a mixed manner, with both positive and negative effects on ROA and ROE. These findings are particularly relevant for practitioners, given the need to integrate minority representation into performance assessment, risk evaluation, and decision-making processes. Furthermore, regarding the female component within firms, this dimension contributes to the promotion of sustainability and a sound ESG-oriented approach. Consequently, social factors such as ethnicity can influence companies’ financial performance and shape how firms are perceived by investors.