Evidence on the Economic Consequences of Marriage Equality and LGBT Human Rights

36 Pages Posted: 17 Jan 2018

See all articles by Jessie Y. Zhu

Jessie Y. Zhu

University of Toronto - Rotman School of Management

Wally Smieliauskas

University of Toronto - Rotman School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: January 17, 2018

Abstract

The recent wave of same-sex marriage legalization marks the most significant human rights progress in decades. Nevertheless, the valuation effects on corporate America are unclear. While the arguments supporting marriage equality are largely in the domain of law and sociology, many prominent business leaders are actively engaged in campaigns advocating marriage equality. This suggests that the LGBT civil rights movement of our generation might have valuation implications for corporate America beyond human rights equality. This paper investigates the market perception of state-level same-sex marriage legalization by examining the short-window market reactions to firms headquartered in a state. We find weak positive market reactions to firms headquartered in states that legally recognize marriage equality. Further, we find that the market views companies more favorably in: (1) first-mover states before the Supreme Court ruling of United States v. Windsor, (2) states that have more established anti-discrimination laws for the LGBT community, and (3) companies that have LGBT-friendly policies in place. Our findings complement prior research that focuses on the economic consequences of firm-level LGBT human rights policies. Such firm level policies represent a new dimension to management control systems that can have a market impact.

Keywords: LGBT Human Rights, Marriage Equality, Market Effects on Firms, Firm Level Controls

JEL Classification: M

Suggested Citation

Zhu, Jessie Y. and Smieliauskas, Wally, Evidence on the Economic Consequences of Marriage Equality and LGBT Human Rights (January 17, 2018). 2018 Canadian Academic Accounting Association (CAAA) Annual Conference. Available at SSRN: https://ssrn.com/abstract=3104061 or http://dx.doi.org/10.2139/ssrn.3104061

Jessie Y. Zhu

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Wally Smieliauskas (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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