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Journal of Business Ethics
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30-08-2018 | Original Paper

Do LGBT-Supportive Corporate Policies Improve Credit Ratings? An Instrumental-Variable Analysis

Authors: Pandej Chintrakarn, Sirimon Treepongkaruna, Pornsit Jiraporn, Sang Mook Lee

Published in: Journal of Business Ethics | Issue 1/2020

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Abstract

We investigate the effect of Lesbian, Gay, Bisexual, and Transgender (LGBT)-supportive corporate policies on credit ratings. To the extent that LGBT-friendly policies are beneficial to the firm and therefore improve its expected cash flows, credit rating agencies should assign more favorable credit ratings to the firm. To alleviate endogeneity concerns, we exploit the variations in the LGBT populations across the states in the U.S. as our instrument. Our instrumental-variable (IV) analysis reveals that firms that adopt LGBT-supportive corporate policies enjoy better credit ratings, supporting the stakeholder and good management hypothesis. Further analysis using propensity score matching also yields consistent results.
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Metadata
Title
Do LGBT-Supportive Corporate Policies Improve Credit Ratings? An Instrumental-Variable Analysis
Authors
Pandej Chintrakarn
Sirimon Treepongkaruna
Pornsit Jiraporn
Sang Mook Lee
Publication date
30-08-2018
Publisher
Springer Netherlands
Published in
Journal of Business Ethics / Issue 1/2020
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI
https://doi.org/10.1007/s10551-018-4009-9

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