A study from researchers at the University of California, Berkeley, found that S&P 500 companies maintaining diversity, equity, and inclusion (DEI) programs saw no detectable difference in financial performance compared to those that ended such initiatives. The research, co-authored by associate professor Jacob Grumbach, analyzed stock market returns and revenue following executive actions by the second Trump administration aimed at reducing these programs.
The study analyzed corporate performance surrounding Executive Order 14173, titled "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," which was signed in January 2025. While the administration encouraged private-sector firms to move away from DEI policies, the researchers found that companies choosing to retain their programs did not face financial penalties from investors or consumers.
The researchers categorized companies into two groups: those that kept their DEI policies, such as Apple, Costco, Delta Air Lines, and Dollar Tree, and those that rolled them back, including Target and Walmart. To measure the impact, the study compared "abnormal performance," defined as the difference between a firm's expected returns and its actual share performance. The analysis found no statistically significant difference in returns or revenue between the two groups.
The scale of the impact is measured through "abnormal returns," a metric that calculates whether a stock is over- or under-performing relative to the broader market. According to the research, there was no measurable financial shift—meaning investors did not sell off shares in a way that moved prices for companies that kept DEI, nor did consumers significantly alter their spending habits to impact total revenue. This suggests that for the average household, corporate diversity stances have not yet led to a noticeable change in the cost of goods or the value of retirement portfolios tied to these specific S&P 500 stocks.
The findings establish a precedent that firms may have more autonomy to resist political pressure regarding social programs than previously assumed. However, Grumbach noted that risks remain, as the executive branch could potentially influence future mergers, acquisitions, or tax audits for firms deemed out of step with federal policy. While the study indicates no immediate financial penalty, the long-term impact of potential Federal Trade Commission (FTC) actions or "hostile tax auditing" remains unknown. The next steps for these policies may depend on further enforcement of Executive Order 14173 or future consumer reactions to corporate initiatives.