Analyst Evaluations of Black Director Appointments and Departures: Rising Conformity and Persistent Asymmetries

As calls for greater board diversity escalate, the market evaluation of Black executives remains equivocal, with much unknown about how key external stakeholders evaluate these changes. Advancing the recent scholarly conversation on Black executives, we propose that the valence of the evaluations will conform to normative attitudes, but significant asymmetries will arise due to the ambiguous performance implications. We theorize that evaluators will reward appointments and penalize departures through changes in favorability, signaling normative conformity. However, we also propose that uncertainty about the performance implications of the change will yield greater reactions to appointments relative to departures. Additionally, evaluations overall will reveal low consensus arising from uncertainty about the performance consequence. We further argue that our proposed effects will strengthen as normative attitudes become more established while performance effects remain ambiguous. We test our theory by examining the reactions of analysts to the appointment and departure of Black directors between 2007 and 2020, finding robust support for our hypothesized relationships. Our research provides critical insights into how important external stakeholders concurrently exhibit normative adherence amid uncertainty about performance effects, exposing important aspects of evaluating normative change.