MIT Sloan Management Review Article on What the Smart Money Says About Black CEOs

Investors’ reactions to an executive appointment often reflect negative bias, while institutional investors take a more positive view.

When any public company announces a new CEO, the board braces itself for investors’ reactions as they manifest in decreases or increases in share price. Investors are a highly salient stakeholder group whose responses to the appointment of chief executives, especially racial minorities, are highly anticipated and undoubtedly influence who is selected. But how much should their prospective reactions matter when a board is leaning toward selecting a Black candidate for the CEO role?

The issue is urgent. Despite noteworthy progress toward racial equity in some industries and at some job levels, Black representation in corporate America’s top leadership positions remains woefully low: The number of Black Fortune 500 CEOs peaked in 2023 — at nine. That is less than 1 in 50 for a racioethnic group that accounts for more than 1 in 8 Americans.

About the Author

Curtis L. Wesley II is an assistant professor of strategy and entrepreneurship at the University of Houston C.T. Bauer College of Business. Hermann A. Ndofor is an assistant professor of management at the Indiana University Kelley School of Business. Enrica N. Ruggs is an associate professor of management at the University of Houston C.T. Bauer College of Business. Derek R. Avery is a professor of management and the C.T. Bauer Chair of Inclusive Leadership at the University of Houston C.T. Bauer College of Business.

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