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LGBT discrimination and harassment, firm value, and reputation repair

Author

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  • Ayed, Sabrine
  • Waxin, Timothée

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.

Suggested Citation

  • Ayed, Sabrine & Waxin, Timothée, 2023. "LGBT discrimination and harassment, firm value, and reputation repair," International Review of Financial Analysis, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finana:v:90:y:2023:i:c:s1057521923003587
    DOI: 10.1016/j.irfa.2023.102842
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    More about this item

    Keywords

    LGBT; Stakeholders; Firm performance; Reputation repair;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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