Knowledge is power, and powerful. Investors use corporate disclosures to make decisions about firms—and it turns out that potential employees do as well. Jobseekers are an important stakeholder group of firms, and new research reveals that information about diversity is useful to jobseekers. This knowledge helps them discern whether a firm is a good fit. The seeker can then weigh the investment calculus of their time in an organization, their human capital.
In new research, SMU Cox Accounting Professor Sorabh Tomar with his coauthors highlight how diversity information influences jobseeker behavior—the “innovation” of their research being the specific focus on information. Notably, Tomar mentions that these human capital disclosures will evolve, with best practices and benchmarking likely emerging over time. “We’re focusing on employees as another stakeholder group that is impacted by disclosures,” Tomar offers. He also acknowledges the existence of a principles-based disclosure regime, whereby firms disclose items that they feel are material (typically to investors).
Curiously, with companies talking up diversity, the lack of companies making quantitative, firm-wide, workforce diversity disclosures was surprising to Tomar. “Firms only have to talk about diversity (or human capital) if they deem it is material,” he reflects. “However, if it’s material, they should talk about it.” The authors’ data suggest that just 17% of publicly-traded firms “disclose either numerical metrics of gender or racial workforce diversity” in 2020 10-K Human Capital Disclosures on file with the Securities and Exchange Commission (SEC). 

Disclose and seek

Partnering with Zippia, an online career advice agency, the researchers implemented a field experiment by randomizing the provision of diversity information in job listings. The study was conducted from June of 2021 through August of 2021 with 178,862 unique jobseekers signing up to receive over 3.5 million email notifications about job listings from Zippia. Zippia’s database of job postings included 107,810 identifiable companies.
The results suggest that diversity information is beneficial to a wide spectrum of the population. Jobseekers showed more interest in firms with higher workforce diversity (based on job-post clicks) when presented with that information. In parts of the country that appear more sensitive to diversity issues, the information is found to be more useful.
The researchers then linked their field experiment results to the disclosures firms make to the SEC under the Human Capital Disclosure requirement. In industries where jobseekers found diversity information to be more useful, firms were more likely to disclose quantitative workforce diversity metrics. Tomar suggests their research speaks to whether firms should disclose this information in the first place. Additionally, “Looking through these disclosures was messy,” he notes, “as the information was presented in many, many different ways which makes comparisons difficult.” To manage this unwieldy information, he enlisted the help of some of his astute SMU Cox students.
Importantly, Tomar notes that labor issues affect the bottomline, which implies that these disclosures could be important metrics for investors. Furthermore, they might serve as a proxy of sorts for firm quality. “These disclosures could affect the allocation of labor to firms,” he says, “as jobseekers can better sort themselves into firms they value.” According to the research, entry-level jobseekers were the most relevant group for the corporate disclosures’ information.


Many in the financial world, particularly institutional investors, are driven by the influence of environmental, social and governance (ESG)-related measures and potential mandates. This research raises the question of how “social” disclosures might evolve. The number of firms disclosing in fiscal year 2021, after the study’s window, has likely increased as the pandemic exposed vulnerabilities in the U.S.’s labor market and how jobseekers are rethinking their career choices.
The study hints that aligning disclosure policies with jobseekers’ values is a better bet. However, just like ESG metrics can be utilized by firms in beneficial ways, a darker side potentially exists whereby disclosure simply leads to ticking boxes, with less attention given to remedying the underlying causes of societal issues.
Nevertheless, the trend towards valuing human capital, the very factors of production, is positive. The stock market capitalization of the FAANG stocks—Facebook, Apple, Amazon, Netflix and Google, plus other human capital-heavy industries—are generally considered growth stocks, engines of innovation. Interestingly, Tomar notes that service industries and consumer-facing ones (such as apparel) tend to disclose diversity information more so than other industries. Larger firms also disclose this information more, he says. “It could be that larger firms have more pressure to disclose [diversity metrics], but there is considerable variation across industry sectors.”
On a big picture level, the study taps into the idea that better matching people to jobs is a net welfare gain to society. It can reduce turnover in an individual firm and prevent jobseekers from landing in the wrong job where a firm’s culture is at odds with their values and career path. The information age just got smarter.
The paper “Do Jobseekers Value Diversity Information? Evidence From a Field Experiment and Human Capital Disclosures” is authored by Sorabh Tomar of Southern Methodist University’s Cox School of Business, Jung Ho Choi of Stanford Graduate School of Business, Joseph Pacelli of Harvard Business School, and Kristina Rennekamp of Cornell University.
Written by Jennifer Warren.