LGBT Discrimination and Harassment, Firm Value, and Reputation Repair

59 Pages Posted: 17 Nov 2022 Last revised: 6 Sep 2023

See all articles by Sabrine Ayed

Sabrine Ayed

EMLV Business School

Timothée Waxin

Léonard de Vinci Pôle Universitaire

Date Written: November 6, 2022

Abstract

This paper analyzes the market reaction to the reported discrimination against or harassment of LGBT stakeholders (i.e., employees and customers) using a unique hand-collected sample consisting of 167 events worldwide. The results show a negative and significant average effect following the announcement of an LGBT misconduct incident, with an around 0.5% abnormal decrease in market value over the event day and the next trading day. The average magnitude of impact is significantly lower after the #MeToo movement, suggesting that investors tend to be less indulgent regarding inappropriate behavior based on sexual orientation. We also find that firms experiencing a large negative magnitude of impact perform concrete corrective actions to repair their tarnished reputation.

Keywords: LGBT, Stakeholders, Firm performance, Reputation repair

JEL Classification: G14, J15, J70, M14

Suggested Citation

Ayed, Sabrine and Waxin, Timothée, LGBT Discrimination and Harassment, Firm Value, and Reputation Repair (November 6, 2022). International Review of Financial Analysis, Vol. 90, 2023, Available at SSRN: https://ssrn.com/abstract=4269486 or http://dx.doi.org/10.2139/ssrn.4269486

Sabrine Ayed (Contact Author)

EMLV Business School ( email )

Paris
France

Timothée Waxin

Léonard de Vinci Pôle Universitaire ( email )

Paris
France

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