Ferdinand Bratek, April Klein, and Yanting (Crystal) Shi have recently posted to ssrn The Market Value of Pay Gaps: Evidence from EEO-1 Disclosures.

Most companies are required to file reports with the EEOC regarding the diversity of their workforce, however, these EEO-1 reports are confidential unless the companies choose to release them. In 2023, a FOIA lawsuit forced the public release of EEO-1 reports for government contractors. The authors use this newly-released granular workforce data to confirm that women and people of color are paid less than white men in a variety of positions, and also that firms financially benefit by having more women and people of color in their workforce. In general, analysts often tout the purported financial benefits that diversity brings to a firm, but these authors suggest the disturbing possibility that diversity benefits a firm by lowering its labor costs.

Most strikingly, the authors find that when this particular EEO-1 data became public, the firms with greater pay gaps experienced more positive shareholder returns. In other words, the market, as well, recognized the value of underpaying women and people of color.

From a ruthless shareholder wealth maximization perspective, that makes perfect sense. But I note that…

As many already know, earlier this week, a Texas federal district court issued a nationwide preliminary injunction against enforcement of the Corporate Transparency Act (“CTA”). Many questions are being raised by the court’s memorandum opinion and order, which can be found here. In addition, law firm memos and newsletter articles have become available and are being circulated, including this one from Stoll Keenon sent to me by friend-of-the-BLPB Tom Rutledge and this one from Wilson Sonsini (which included the opinion link provided above).

Also, members of the American Bar Association’s LLCs, Partnerships and Unincorporated Entities Committee are hosting a free Webinar tomorrow on the Texas opinion. The program, The Corporate Transparency Act Update: Texas Decision, is scheduled for Friday, December 6, 2024, 3:30 p.m. E.T. Program information is included below. I registered and plan to be there!

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On Tuesday, December 3, 2024, a Texas Federal District court issued a preliminary injunction against the Corporate Transparency Act. Please join in this discussion and gain a head start on drafting client communications of this significant development. The panel will review the best information available as to what this means for you and your clients. The LLCs, Partnerships…

Dear Readers:

“The Department of Insurance, Legal Studies and Real Estate in the Terry College of Business at The University of Georgia invites applications for a full-time non-tenure-track faculty position in Legal Studies at the lecturer level, beginning in fall semester 2025, with an employment start date of August 1, 2025.

Candidates must hold a juris doctorate or equivalent degree. Strong communication skills and demonstrated potential for excellent teaching are required. The position is renewable based on performance and promotion to Senior Lecturer is possible after six years of service. For information regarding the requirements for each faculty rank, please see the University of Georgia Guidelines for Appointment and Promotion of Lecturers (https://provost.uga.edu/policies/appointment-promotion-andtenure/guidelines-for-appointment-and-promotion-of-lecturers/).

Participation in service activities appropriate to the rank is expected. Salary is competitive and commensurate with qualifications.”

The complete announcement regarding this position is here: UGA Legal Studies Lecturer – Start Fall 2025

I was struck by this article recently published in the WSJ on the use of AI for investor relations:

Investor relations departments at companies such as shoe brand Skechers USA and networking-systems and software provider Ciena have begun using generative artificial-intelligence to help prepare their earnings commentary.

Some have used generative AI to predict the questions analysts might ask, for example, and to ready the best answers….

Executives at many companies are using AI to refine word choice in their prepared remarks, for instance, in deciding whether to say the quarter was “strong” or “solid,” said Dan Sandberg, head of quantitative research and solutions at S&P Global Market Intelligence. The firm’s tool recently preferred “strong,” based on the earnings metrics of other companies that used the word on their earnings calls, he said. 

Generative AI can also read the harmonics in executives’ prepared statements on earnings, assessing them as upbeat, gloomy or something more measured…

As any securities litigator knows, these are exactly the kinds of nuances of communication that – when they become the subject of a securities fraud lawsuit – are routinely dismissed by courts as “puffery,” i.e., conveying no material information to investors. For example, a very…

Delaware maintains its stature because it favors no one. Critics from the right declare it has adopted an anti-shareholder and approach sympathetic to the environmental, social, and governance movement, while critics from the left blame Delaware for stalling ESG. Logic suggests that one of these

Bloomberg had a story this week on some new anti-ESG shareholder proposals put forth by the National Legal and Policy Center. The proposals ask McDonald’s and other companies to de-link executive pay from diversity goals, on the grounds that, among other things, DEI programs are now the subject of various lawsuits (I will leave it to the reader to imagine a picture of a guy in a hot dog suit).

I had a very mixed reaction to this news. My priors are, there are a lot of legitimate criticisms of DEI programs – they’re ineffective, they’re greenwashing, and the compensation measures are weak – but I worry that many of the current attacks are not grounded in concern that DEI programs are ineffective, but in concerns that they are effective in making workplaces and other spaces more welcoming to underrepresented groups, a position that I find morally objectionable.

Historically, though, anti-ESG proposals tend to fare very poorly at the ballot box, and even though activists like Robby Starbuck have been successful in intimidating companies into backing away from DEI efforts, it is not at all clear this is something shareholders support. Therefore, my original thinking was, I’m…