Diversity has emerged as a topic of increasing organizational and legislative relevance. Despite forming a burgeoning research field in accounting, little is known about how organizations respond to diversity disclosure legislation. In this paper, we study the introduction of diversity disclosure legislation in the European Union that mandates corporate diversity disclosures, and we analyze how 30 large German companies disclose diversity in their annual reports. Drawing on institutional theory and Oliver’s (1991) seminal work on strategic responses to institutional processes, our analysis reveals four mandatory reporting responses: dismissal, concealment, imitation, and transcendence. Overall, our findings show that although diversity has been institutionalized into organizational environments by the European Union through legislative action, organizational responses vary, from resistance to passive conformity or proactive compliance. With these findings, our study adds to the emergent diversity accounting literature, and we conclude by highlighting implications of our work for policymakers, managers, and researchers.

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