LGBT-supportive corporate policies, risk aversion and mitigation and economic policy uncertainty

Chaiyuth Padungsaksawasdi, Sirimon Treepongkaruna, Pornsit Jiraporn

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

Purpose: The paper aims to investigate the effect of uncertain times on LGBT-supportive corporate policies, exploiting a novel text-based measure of economic policy uncertainty (EPU) that was recently constructed by Baker et al. (2016). LGBT-supportive policies have attracted a great deal of attention in the media lately. There is also a rapidly growing area of the literature that addresses LGBT-supportive policies specifically. Design/methodology/approach: The authors execute a regression analysis and several other robustness checks including propensity score matching (PSM) and an instrumental-variable analysis to mitigate endogeneity. Findings: The authors' results show that companies significantly raise their investments in LGBT-supportive policies in times of greater uncertainty, reinforcing the risk mitigation view where LGBT-supportive policies create moral capital with an insurance-like effect that mitigates adverse consequences during uncertain times. The effect of EPU on LGBT-supportive policies is above and beyond its effect on corporate social responsibility (CSR) in general. Originality/value: The authors' study is the first to explore the effect of uncertain times on LGBT-supportive corporate policies. The authors contribute to a crucial area of the literature that examines how firms respond to EPU. In addition, the authors enrich the literature on LGBT-friendly policies by showing that EPU is one of the significant determinants of LGBT-friendly policies.

Original languageEnglish
Pages (from-to)240-256
Number of pages17
JournalReview of Behavioral Finance
Volume15
Issue number2
Early online date4 Jan 2022
DOIs
Publication statusPublished - 14 Mar 2023

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