Does lesbian and gay friendliness pay off? A new look at LGBT policies and firm performance

Abstract

This paper examines the association between LGBT-friendly corporate policies and firm performance. Using data on US 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. Overall, our empirical findings provide support for the view that socially progressive corporate policies and diversity management may create value for the firm.

Exploring how organizational performance feedback influences corporate social responsibility (CSR): the moderating role of LGBT inclusion

“…Similarly, stakeholder alignment is important because stakeholders would only support organizational actions that are in line with their values and beliefs (Bundy et al, 2013(Bundy et al, , 2018Ferrero-Ferrero et al, 2016). Organizational benefits of CSR adoption diminish if the stance taken was not aligned with the preferences and values of the firm's stakeholders (Fatmy et al, 2021;Hambrick and Wowak, 2021).…”

“…We also argue that LGBT inclusion – another very timely and relevant socially responsible organizational action (Shan et al ., 2017) – is a boundary condition on these relationships. LGBT inclusion is a unique form of CSR that accounts for CSR consistency within organizations and stakeholder support of social responsibility in general (Fatmy et al ., 2021; Hossain et al ., 2019). We show that the degree of LGBT inclusion influences CSR responses to performance feedback, but only when performance is below aspirations.…”

Corporate decisions on LGBT friendliness: a multi-level approach

“…One such dimension is LGBT friendliness which includes a firm's policies and practices that support the rights and well-being of LGBT individuals among stakeholders (Gardberg et al, 2022;Webster et al, 2018). Research has shown that LGBT friendliness can have various benefits for corporate reputation, customer relations, human capital accumulation and access to resources and external financing, which is similar to the core paradigm of CSR (Miles and Arnold, 1991;Tuten, 2005;Fatmy et al, 2022). According to extant studies, implementing CSR practices is a complex process that is difficult to explain through a single theory (Fernando and Lawrence, 2014); multiple theoretical lenses are more capable of explaining CSR.…”

LGBTQ-inclusive fan codes of conduct in US athletic departments: a multilevel analysis

“…Indeed, in the context of the current study, there is some evidence that larger organizations are more attentive to LGBTQ inclusion than their smaller counterparts. For example, Fatmy et al (2022) collected data from 657 publicly traded firms in the USA from 2003 to 2016, focusing on LGBTQ inclusiveness and various measures of firm performance. In addition to demonstrating that welcoming organizations outperformed their peers across a number of measures, the authors found that larger firms were likely to be more inclusive than smaller ones.…”

“…Large organizations have also been found to be more inclusive than smaller organizations (Fatmy et al, 2022;Roumpi et al, 2020;Kates et al, 2018), and in the context of universities, there is evidence that, similarly, larger institutions prioritize inclusion. In investigating the publishing of diversity mission statements by state flagship universities (typically considered large institutions), Taylor et al (2019) found that 49 of 50 institutions had developed and publicized diversity-specific mission statements, the majority of which referred to a variety of diverse identities including sexual orientation, ethnicity, race and religion.…”