Does Lesbian and Gay Friendliness Pay Off? A New Look at LGBT Policies and Firm Performance

57 Pages Posted: 12 Apr 2019 Last revised: 19 May 2020

See all articles by Veda Fatmy

Veda Fatmy

University of Vaasa

John Kihn

University of Vaasa - Department of Accounting and Finance

Jukka Sihvonen

Aalto University

Sami Vähämaa

University of Vaasa

Date Written: May 19, 2020

Abstract

This paper examines the association between LGBT-friendly corporate policies and firm performance. Using data on U.S. firms from 2003 to 2016, we document that LGBT friendliness is positively associated with firm performance. Specifically, we find strong evidence that more LGBT-friendly firms have higher profitability and higher stock market valuations. Our results further demonstrate that the positive effect of progressive LGBT policies on firm performance is more pronounced for firms located in more liberal states while being weaker or non-existent for firms located in more conservative states. Overall, our empirical findings provide support for the view that socially progressive corporate policies and diversity management may create value for the firm.

Keywords: LGBT policies, firm performance, sexual minorities, employee policies

JEL Classification: D22, G30, G31, G39, J15, J70, J83, M12, M50

Suggested Citation

Fatmy, Veda and Kihn, John and Sihvonen, Jukka and Vähämaa, Sami, Does Lesbian and Gay Friendliness Pay Off? A New Look at LGBT Policies and Firm Performance (May 19, 2020). Available at SSRN: https://ssrn.com/abstract=3359814 or http://dx.doi.org/10.2139/ssrn.3359814

Veda Fatmy

University of Vaasa ( email )

P.O. Box 700
FIN-65101 Vaasa, FI-65101
Finland

John Kihn

University of Vaasa - Department of Accounting and Finance ( email )

P.O. Box 700
FIN-65101 Vaasa, FI-65101
Finland

Jukka Sihvonen

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

Sami Vähämaa (Contact Author)

University of Vaasa ( email )

P.O. Box 700
Vaasa, FI-65101
Finland
+358 29 449 8455 (Phone)

HOME PAGE: http://www.uva.fi/~sami

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