Berkeley researchers tracked what happened to company stock and revenue after the 2025 anti-DEI order
When President Trump signed Executive Order 14173 in January 2025, ordering federal agencies to eliminate diversity, equity and inclusion (DEI) programs and pressuring private companies to follow suit, many executives assumed that keeping DEI commitments in place was too financially risky, courting consumer backlash or regulatory retaliation from the administration.
A new academic paper suggests that assumption wasn't quite right.
The study, "Markets Do Not Punish Firms for Maintaining DEI," was published last month through the Democracy Policy Lab at UC Berkeley's Goldman School of Public Policy. The researchers compared S&P 500 companies that kept their DEI commitments after the executive order against those that rolled them back, using stock returns and revenue as the measure, and found no meaningful difference between the two groups.
Jacob Grumbach, an associate professor at UC Berkeley's Goldman School of Public Policy in California, co-authored the study. When he started the project, nobody knew exactly how the executive order would actually be enforced.
"Would firms that were out of step on the executive order have DOJ [Department of Justice] investigations? Would they be less likely to have mergers and acquisitions approved by the FTC [Federal Trade Commission]? It was very uncertain," Grumbach said.
That regulatory uncertainty hasn't fully cleared up. The Equal Employment Opportunity Commission (EEOC) has separately moved to scrap a decades-old requirement that employers report their workforce's race and gender data to the government, and most of the country's biggest companies have already stripped explicit diversity requirements out of their own board governing documents.
Keeping DEI showed no effect, either way
Grumbach said he wanted to study what happens when large firms resist this kind of political pressure, since an administration leaning directly on companies this way hadn't really happened before.
"This is sort of new territory in the American economy, where an administration has really sought to pressure firms, with selective and hostile regulation, to essentially support the administration and reduce opposition," Grumbach said.
That raised an obvious question: would resisting the executive order actually cost companies money?
"There was the idea that the Trump coalition was culturally dominant, and if firms were out of step, maybe consumers would punish firms for maintaining DEI. But on the other hand, American liberals and liberal metros are very high-spending parts of the country, and there could be consumer backlash against firms that dropped DEI, like Target. So that cuts both ways," Grumbach said.
Since companies rarely describe their DEI programs the same way, Grumbach's team checked four different factors to determine whether a company had kept its DEI commitments or rolled them back: public statements, regulatory filings, shareholder votes and third-party tracking.
"No matter which measure you use, you find the same findings," Grumbach said.
Whether measured by stock returns or revenue, the result was the same either way. On the revenue side, the average effect across every version of the analysis came out to exactly 0.00.
Costco, Target and Apple
The study looked at all 500 companies in the index, but a few specific cases stand out, starting with two direct retail competitors that took opposite approaches to DEI.
"Costco and Target was the most consumer salient pairing," Grumbach said. "Target got this boycott, led mostly by Black churches and American liberals in general, after ending DEI in a very public way. Costco really publicly doubled down on DEI. So there was a shift in spending from Target to Costco."
The study found that shift in where consumers spent their money didn't translate into a lasting difference in stock performance between the two companies, however, which was consistent with the broader finding.
Grumbach said that unpredictability is typical of consumer boycotts.
"Firms were afraid of consumer backlash, like the Bud Light boycott, when they had a transgender person do a social media ad in 2023. That was the one right-wing boycott campaign that was actually effective at affecting a company's bottom line and market share. But other attempts at boycotts kind of fell flat. It's still an open question in C-suites what consumers will actually do," Grumbach said.
Apple faced a different kind of pressure, this one coming directly from the White House. After Apple's shareholders voted down an anti-DEI resolution in early 2025, Trump criticized the company by name on Truth Social.
"I really like the Apple case, because that's one where Trump himself made it salient," Grumbach said. "Trump's post slightly affected Apple's stock price that day, but then it climbed right back up. In the medium and long term, that did not affect Apple in the least."
That kind of unpredictability is part of why some HR leaders are working to make DEI's value measurable in business terms, rather than dependent on shifting politics, and clearer ways to measure outcomes instead of just reacting to backlash have started to emerge.
What this means going forward
Grumbach doesn't expect many companies to revive the DEI programs they've already dropped, even with these findings in hand.
"There's no going back in time. Many firms, as well as other civil society organizations like law firms, folded to early 2025 Trump administration directives, and there's no going back now," Grumbach said. "I think a lot of these firms see that it was not necessary economically to do that, that they feared being in the spotlight with the administration."
Companies still weighing the decision have a simpler takeaway than executives had in early 2025, he said.
"In hindsight, it's very clear that firms have the leeway to keep those programs. Firms' decisions were based more in economic projections that did not come true, or really their own preferences," Grumbach said. "The point is that you don't need to comply in advance unless you really want to."
