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Do LGBT Workplace Diversity Policies Create Value for Firms?

Author

Listed:
  • Mohammed Hossain

    (Griffith Business School
    Sohar University)

  • Muhammad Atif

    (University of Essex)

  • Ammad Ahmed

    (Zayed University)

  • Lokman Mia

    (Griffith Business School)

Abstract

We show that the U.S. anti-discriminatory laws prohibiting discrimination in the workplace based on sexual orientation and gender identity (i.e. lesbian, gay, bisexual, and transgender (LGBT) identities) spur innovation, which ultimately leads to higher firm performance. We use the Human Rights Campaign’s Corporate Equality Index (CEI) of 398 (1592 firm-year observations) U.S. firms between 2011 and 2014, and find a significantly positive relationship between CEI and firm innovation. We also find that an interacting effect of CEI and firm innovation leads to higher firm performance. We use our understanding of Rawls’ Theory of Justice and stakeholder theory to show that firms with workplace diversity policies are likely to be more innovative and perform better than those without such policies. Our results are robust to endogeneity, reverse causality and simultaneity issues. Our results will trigger debate in similar markets around the globe on the economic benefits of LGBT workplace diversity policies for firms.

Suggested Citation

  • Mohammed Hossain & Muhammad Atif & Ammad Ahmed & Lokman Mia, 2020. "Do LGBT Workplace Diversity Policies Create Value for Firms?," Journal of Business Ethics, Springer, vol. 167(4), pages 775-791, December.
    • Handle: RePEc:kap:jbuset:v:167:y:2020:i:4:d:10.1007_s10551-019-04158-z
    DOI: 10.1007/s10551-019-04158-z
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    4. Mario Alberto García-Meza, 2021. "The Cost of Work Discrimination: A Market Capture Differential Game Model," Mathematics, MDPI, vol. 9(19), pages 1-10, September.
    5. Hossain, Ashrafee & Rjiba, Hatem & Saadi, Samir, 2022. "Judge Ideology and Corporate Sexual Orientation Equality," Finance Research Letters, Elsevier, vol. 49(C).
    6. Darryl B. Rice & Regina M. Taylor & Yiding Wang & Sijing Wei & Valentina Ge, 2023. "My Company Cares About My Success…I Think: Clarifying Why and When a Firm’s Ethical Reputation Impacts Employees’ Subjective Career Success," Journal of Business Ethics, Springer, vol. 186(1), pages 159-177, August.
    7. Do, Hung X. & Nguyen, Lily & Nguyen, Nhut H. & Nguyen, Quan M.P., 2022. "LGBT policy, investor trading behavior, and return comovement," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 457-483.
    8. Chowdhury, Hasibul & Hossain, Ashrafee & Masum, Abdullah-Al & Zheng, Jiayi, 2023. "Does corporate sexual orientation equality affect labor investment efficiency?," Global Finance Journal, Elsevier, vol. 55(C).
    9. Drydakis, Nick, 2021. "The Economics of Being LGBT. A Review: 2015-2020," IZA Discussion Papers 14845, Institute of Labor Economics (IZA).
    10. Petr Parshakov & Iuliia Naidenova & Carlos Gomez-Gonzalez & Cornel Nesseler, 2023. "Do LGBTQ-Supportive Corporate Policies Affect Consumer Behavior? Evidence from the Video Game Industry," Journal of Business Ethics, Springer, vol. 187(3), pages 421-432, October.
    11. Eline Jammaers, 2023. "Theorizing Discursive Resistance to Organizational Ethics of Care Through a Multi-stakeholder Perspective on Disability Inclusion Practices," Journal of Business Ethics, Springer, vol. 183(2), pages 333-345, March.
    12. Hasan, Mostafa Monzur & Cheung, Adrian (Wai Kong) & Marwick, Trevor, 2022. "Corporate sexual orientation equality policies and the cost of equity capital," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    13. Mohammed Hossain & Yasean A. Tahat & Naser AbuGhazaleh, 2024. "Unlocking the Sustainable Workplace Equality Policy (SWEP): Evidence from an Emerging Country," Sustainability, MDPI, vol. 16(2), pages 1-22, January.
    14. Nick Drydakis, 2022. "Sexual orientation and earnings: a meta-analysis 2012–2020," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(2), pages 409-440, April.
    15. Yimin Cheng & Xiaoyu Zhou & Kai Yao, 2023. "LGBT-Inclusive Representation in Entertainment Products and Its Market Response: Evidence from Field and Lab," Journal of Business Ethics, Springer, vol. 183(4), pages 1189-1209, April.
    16. Benjamin P. Foster & Andrew S. Manikas & James R. Kroes, 2023. "Which diversity measures best capture public company value?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 236-247, January.
    17. Gull, Ammar Ali & Atif, Muhammad & Hussain, Nazim, 2023. "Board gender composition and waste management: Cross-country evidence," The British Accounting Review, Elsevier, vol. 55(1).
    18. Brodmann, Jennifer & Hossain, Ashrafee & Masum, Abdullah Al & Singhvi, Meghna, 2021. "Chief Executive Officer power and Corporate Sexual Orientation Equality," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    19. Muhammad Atif & Benjamin Liu & Sivathaasan Nadarajah, 2022. "The effect of corporate environmental, social and governance disclosure on cash holdings: Life‐cycle perspective," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2193-2212, July.
    20. Simone Pulcher & Marco Guerci & Thomas Köllen, 2022. "When stakeholders claim differently for diversity management: Adopting lesbian, gay and bisexual‐inclusive practices in Italy," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 815-840, December.
    21. Isabel Costa Lourenço & Donatella Di Marco & Manuel Castelo Branco & Ana Isabel Lopes & Raquel Wille Sarquis & Mark T. Soliman, 2021. "The Relationship between LGBT Executives and Firms’ Value and Financial Performance," JRFM, MDPI, vol. 14(12), pages 1-18, December.

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