Corporate Governance and LGBT-Supportive HR Policies from CSR, Resource-based, and Agency Perspectives

51 Pages Posted: 20 Dec 2018

See all articles by Denise Potosky

Denise Potosky

Pennsylvania State University, Great Valley School of Graduate Professional Studies

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Sang Mook Lee

Pennsylvania State University - Great Valley School of Graduate Professional Studies

Date Written: December 19, 2018

Abstract

Corporate boards are responsible for ensuring that managers enact policies that are in shareholders’ best interests, and managers are responsible for implementing strategies that are not only profitable, but responsive to changing legal and societal demands and the resource needs of the firm. In this paper, we use the theoretical lenses of corporate social responsibility (CSR), the resource-based view (resource-based view), and agency theory to investigate the relationship between corporate governance structure and the implementation of supportive lesbian, gay, bisexual, and transgender (LGBT) policies. We analyze 10,233 firm-year observations and 1,594 unique firms, and our results demonstrate that LGBT-supportive policies are positively associated with firm performance. We also offer new insight into why not all firms adopt such policies. We exploit the passage of the Sarbanes-Oxley Act as an exogenous shock that increased board independence, and our difference-in-difference estimation shows that firms forced to raise board independence in 2002 were less likely to invest in LGBT-supportive policies. Results suggest that HRM policies can be guided by CSR and resource-based view in pursuit of wealth maximization, but agency conflict may also be a concern for external majority boards. We discuss implications for HRM research practice, and corporate governance regarding LGBT policies in organizations.

Keywords: LGBT-supportive policies, corporate governance, firm performance, corporate social responsibility

JEL Classification: G32, G34

Suggested Citation

Potosky, Denise and Jiraporn, Pornsit and Lee, Sang Mook, Corporate Governance and LGBT-Supportive HR Policies from CSR, Resource-based, and Agency Perspectives (December 19, 2018). Available at SSRN: https://ssrn.com/abstract=3303647 or http://dx.doi.org/10.2139/ssrn.3303647

Denise Potosky

Pennsylvania State University, Great Valley School of Graduate Professional Studies ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
+1 610-648-3229 (Phone)

HOME PAGE: http://https://greatvalley.psu.edu/

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

Sang Mook Lee

Pennsylvania State University - Great Valley School of Graduate Professional Studies ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
610-725-5391 (Phone)

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