Stakeholder theory rooted in Rawls' view of justice as fairness argues that firms treat all their stakeholders fairly, including the powerless and marginalized. Despite this, much research has focused on ways to prioritize stakeholders and “manage” them according to their significance. To help ease this tendency, we adopt a social identity perspective of stakeholders and examine stock price implications of firms' diversity, equity, and inclusion (DEI) initiatives undertaken for vulnerable social groups when their liberties are undermined. Noting that social groups in the US are often supported and undermined depending on who the president is, we zoom in on two recent presidencies, Obama's and Trump's, who showed stark differences in treating two social groups—military veterans and LGBT groups. We found that DEI initiatives conducted to assist a social group resulted in higher stock prices during the presidency undermining the group than during the presidency supportive of the group. These findings are robust and supported by cumulative abnormal returns and regression results. Overall, our study encourages more research highlighting the upsides of corporate initiatives for those who have been on the periphery of stakeholder management. It also highlights the benefits of shifting our views from the firm-centric economic roles of stakeholders toward the more inclusive social identity perspective.
