Picturing Diversity: The Use of Photographs in Annual Reports

Abstract

I examine firms’ depictions of diversity using photographs in annual reports. I investigate how the determinants of diverse pictorial content varies from those of actual firm diversity practices and whether these vary with pressure from various firm stakeholders, such as customers, employees, communities, and investors. I classify scraped faces by gender and race to determine the diversity of annual report pictorial content and compare this to firms’ actual performance on diversity practices such as strong policies that facilitate workforce diversity. I find evidence consistent with firms catering these photographs to stakeholders of the firm. In particular, I find that firms strategically portray more diversity in the pictorial content of their annual reports when they operate in industries that are more visible to the general public (in addition to more diversity practices), and when they exhibit ownership by socially conscious investors (in lieu of diversity practices). I also find evidence of changes in both pictorial diversity and diversity practices following the #MeToo movement, consistent with a shift in diversity strategy.