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

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

Research output: Contribution to journalArticlepeer-review

36 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)31-45
Number of pages15
JournalJournal of Business Ethics
Issue number1
StatePublished - Feb 1 2020

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Business, Management and Accounting(all)
  • Arts and Humanities (miscellaneous)
  • Economics and Econometrics
  • Law


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