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DEI policies brought no financial penalty to firms, study finds

From CBS News · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Companies maintaining diversity, equity, and inclusion (DEI) programs during the second Trump administration faced no financial penalties, according to a new study.
  • A University of California, Berkeley study found that S&P 500 companies that kept their DEI efforts performed similarly in stock market returns and revenue compared to those that reduced them.
  • The findings suggest that U.S. firms have significant flexibility to resist pressure to cut DEI programs, though some executives may fear retaliation from the administration.

Companies that maintained diversity, equity, and inclusion (DEI) programs during the second Trump administration did not suffer financial penalties, a new study reveals. Corporations in the S&P 500 that continued their DEI initiatives performed on par with firms that scaled back their diversity efforts, in terms of both stock market returns and revenue.

U.S. firms have a lot of leeway

— Jacob GrumbachJacob Grumbach, an associate professor at the Goldman School of Public Policy at the University of California, Berkeley and the co-author of the new paper, "Markets Do Not Punish Firms for Maintaining DEI," told CBS News, explaining the findings of the study.

The study, "Markets Do Not Punish Firms for Maintaining DEI," focused on financial performance before and after President Trump signed Executive Order 14173 in January 2025. Major U.S. retail and tech companies, including Apple, Costco, Delta Air Lines, and Dollar Tree, kept their DEI programs intact despite the administration's push to reduce such initiatives. In contrast, some businesses like Target and Walmart rolled back their diversity efforts.

Researchers analyzed "abnormal performance," the difference between expected and actual share performance, finding no disparity between companies that retained DEI programs and those that eliminated them. Revenue analysis also showed no detectable consumer backlash or support linked to DEI efforts.

A publicly traded firm that's out of step with an executive order might get less favorable treatment from the executive branch. Or if it's planning a merger or acquisition, it might not be approved by the Federal Trade Commission, or it could be subject to hostile tax auditing.

— Jacob GrumbachJacob Grumbach, an associate professor at UC Berkeley, discussed potential economic risks for companies that maintained DEI efforts despite the Trump administration's stance.

Jacob Grumbach, an associate professor at UC Berkeley and co-author of the paper, stated that U.S. firms "have a lot of leeway" to resist pressure to cut DEI programs. However, he also noted that corporate executives might legitimately fear retaliation from the Trump administration. This could include less favorable treatment from the executive branch, or potential hurdles with the Federal Trade Commission for mergers and acquisitions, or increased tax auditing. Grumbach acknowledged that this fear was understandable given the uncertainty surrounding the executive order's enforcement.

The fear was legitimate. At this time, there was a lot of uncertainty about how the executive order would be enforced.

— Jacob GrumbachJacob Grumbach commented on the legitimacy of corporate fears regarding potential retaliation from the Trump administration over DEI policies.
DistantNews Editorial

Originally published by CBS News. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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