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 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.