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The Relationship between LGBT Executives and Firms’ Value and Financial Performance

Author

Listed:
  • Isabel Costa Lourenço

    (Business Research Unit (BRU-IUL), Instituto Universitário de Lisboa (ISCTE-IUL), 1649-026 Lisbon, Portugal)

  • Donatella Di Marco

    (Business Research Unit (BRU-IUL), Instituto Universitário de Lisboa (ISCTE-IUL), 1649-026 Lisbon, Portugal
    Department of Social Psychology, Universidad de Sevilla, 41004 Sevilla, Spain)

  • Manuel Castelo Branco

    (Faculty of Economics, University of Porto, CEF.UP., OBEGEF, 4050-313 Porto, Portugal)

  • Ana Isabel Lopes

    (Business Research Unit (BRU-IUL), Instituto Universitário de Lisboa (ISCTE-IUL), 1649-026 Lisbon, Portugal)

  • Raquel Wille Sarquis

    (School of Economics, Business and Accounting, University of São Paulo (USP), São Paulo 13566-590, Brazil)

  • Mark T. Soliman

    (Marshall School of Business, University of Southern California, Los Angeles, CA 90089, USA)

Abstract

Drawing on resource-based theory, we analyze the relationship between having LGBT executives in a firm’s leadership positions and its value and financial performance. The existence of LGBT executives is considered to be associated with employee and customer goodwill towards LGBT-friendly policies and practices and to lead to human capital and reputational benefits. Our findings suggest that there is a positive effect of the presence of LBGT executives on a firm’s value, both directly and indirectly, through its effect on the firm’s financial performance. We interpret this as suggesting that besides the direct effect of the existence of LGBT executives on a firm’s value, an indirect effect also exists, mediated through financial performance, presumably through the effect that this has on employee and customer goodwill towards LGBT-friendly policies and practices. As far as we are aware, our study is the first to examine the impacts of the presence of LGBT executives, as well as distinguish between its direct and indirect effects on firm value.

Suggested Citation

  • 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.
    • Handle: RePEc:gam:jjrfmx:v:14:y:2021:i:12:p:596-:d:699904
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    References listed on IDEAS

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    Cited by:

    1. Brahma, Sanjukta & Gavriilidis, Konstantinos & Kallinterakis, Vasileios & Verousis, Thanos & Zhang, Mengyu, 2023. "LGBTQ and finance," International Review of Financial Analysis, Elsevier, vol. 86(C).

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