Ethnically Distinct CEOs and Corporate Decision-Making

We examine whether diversity in top leadership—specifically when CEOs differ ethnically from their executive peers—shapes corporate decision-making. We introduce novel measures of CEO ethnic distinctiveness that capture both the representation of a CEO’s ancestry within the executive pool and its cultural distance from prevailing norms. Textual analysis of earnings conference calls shows that ethnically distinct CEOs exhibit lower linguistic assertiveness and a more relational communication style, suggesting such CEOs display weaker positional power. We then examine the implications for corporate policy using workplace safety outcomes from the Occupational Safety and Health Administration (OSHA). Our baseline results show that firms led by more ethnically distinct CEOs experience significantly fewer workplace safety incidents. Cross-sectional tests indicate that this effect is not driven by intrinsic preferences but by a compensatory response to weaker positional power: it is substantially weaker among powerful CEOs, CEOs with stronger local social capital, and CEOs facing lower career concerns. Finally, we show that these firms exhibit lower operational efficiency, suggesting that safer workplaces arise from a compensatory emphasis on employee protection that comes at the cost of productivity.