1672: A Human and Social Capital Perspective on Institutional Owner Reactions to Black CEO Appointments (10283)

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This study builds on recent research on Black CEO appointments by juxtaposing a pessimistic view, whereby discrimination leads to negative market responses, and an optimistic view, where accumulated human and social capital held by appointees overcomes prejudices, leading to positive market responses. As an influential firm shareholder, we focus on the institutional owner buy/sell behavior around CEO succession announcements. We hypothesize that their fiduciary responsibilities and interpretation of public and privileged information lead to more positive market responses for Black CEOs with high levels of human and social capital. Using a matched sample of 104 Black and non-Black CEO appointments from 1997 to 2022, we find an appointed Black CEO’s accumulated human and social capital positively moderates the relationship between their announcement and institutional owner buy/sell behavior. Our findings support the optimistic view and contribute to the literature that addresses minority representation in the upper echelons. Keywords: minority CEOs, institutional owners, human capital, social capital

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