President Donald Trump’s executive orders cracking down on diversity, equity and inclusion, in both the public and private sectors struck fear into the hearts of employers. But many, including companies like Apple, Costco and Disney, did not back down — creating a sort of narrative battle between which path would be viable in the long run.
So one research team decided to try and quantify it. Jacob Grumbach, an associate professor of public policy at the University of California, Berkeley, and Hanna Folsz, a Stanford University political science doctoral candidate, sought to determine if companies that rolled back DEI performed better than their peers.
Per Grumbach and Folsz’ research, they did not.
“Markets Do Not Punish Firms for Maintaining DEI” showed how employers who did not roll back their DEI commitments, such as Cisco, Delta Airlines, JPMorgan Chase and Microsoft, among others, outperformed their fellow S&P 500 companies — such as Citigroup, Dollar General, Target and Walmart — who did. Grumbach was curious about both the business and political aspects of DEI decisions, he told HR Dive over the phone.
Noting that Trump 2.0 has taken a more “aggressive” anti-DEI stance, he said, “I wanted to see what happens to U.S. firms that are out of step with executive branch priorities in this new era, where in the past you would not expect there to be sort of ‘punishment’ for being out of step with a regime — versus now there are new potential threats.”
Grumbach nodded to U.S. Federal Communications Commission’s TV station battle and the government threatening to defund universities that are perceived to be “in opposition” to Trump’s administration regarding DEI issues.
“What happens when companies are out of step with the executive branch on its priorities?” Grumbach asked.
How Grumbach determined his answers
The first step of figuring out which S&P 500 companies had kept their DEI commitments was tricky.
“DEI programs are very different across companies and organizations […] Some are deeper and some are more symbolic,” Grumbach said. “Executives from firms sometimes give contradictory statements — or they may just rename a DEI program to ‘operational success’ or something, but otherwise it’s the same.”
With this in mind, they approached this part of the research process in four ways:
- Looking at executive statements about a company’s DEI programs
- Scouring a company’s 10-K filings with the U.S. Securities and Exchange Commission, which may include DEI programming in its description of business practices
- Revisiting shareholder votes regarding DEI-related proposals
- Referring to DEI Watch, a corporate accountability database, as a final check
“Across all of these different ways of understanding which companies keep DEI or not, we get the same answer that firms performed about equally well on average,” Grumbach explained.
Of course, there is the question of quantifying how an employer performed, business-wise.
“It could just be that all the firms that have DEI are just otherwise super successful, and all the ones that folded on DEI are in sectors that are declining, right?” Grumbach said of the external variables. That kind of performance might have nothing to do with DEI, he added.
The team used a couple methods, but the most important one, Grumbach said, was studying abnormal returns. Abnormal returns indicate the health of an individual company compared to its peers of the same exact size in the same exact industry. “How did a stock perform compared to how we’d expect it to perform — that helps us,” he said. This is crucial because certain kinds of companies, such as dollar stores, tend to perform better during certain economic periods.
“You don’t want to mistake that as the effect of DEI — so that’s what that abnormal return method really does,” he said.
Why HR should care about these DEI findings
Target, a company whose performance dropped in light of its DEI rollback by Grumbach’s count, is a perfect case study. The big box retailer was a lightning rod for the DEI movement, with its DEI rollback causing a 30-day boycott during Black History Month to blossom into a year-long rejection. Just as the company was limping out from under the weight of sour consumer attitudes, the Halloween costume controversy added gasoline to the fire.
In speaking about DEI and business performance, Grumbach mentioned Target and noted “the focus of American liberals on Target, versus Costco, which maintained DEI.” Liberal consumers continue to hold companies’ feet to the flames and make decisions based on perceived employer attitudes toward DEI.
But Trump’s election and inauguration brought DEI crackdowns on the first day, giving many employers pause.
“If you remember early 2025, the fear in the boardrooms was legitimate. It felt like the administration seemed culturally dominant at that point,” Grumbach said. “Many civil society organizations, like universities, law firms, labor unions and businesses, were kind of rushing to be in line with the administration, either fearing punishment or being enthusiastic partners with the administration.”
But in November 2025, attorneys told HR Dive’s audience to “lean on the law” and stay the course on DEI.
“Sometimes something feels very obvious, like getting rid of DEI in early 2025, and it turns out to not be so obvious,” Grumbach said, adding that bigger companies typically have the sway to chart any path executives and shareholders want. And while HR professionals can’t control the entire company, he continued, HR can help shape the direction of the company’s culture.
“You can chart your own way,” he said.