The impact of foreign-born CEOs and female CEOs on LGBT-friendly HR policies and firm performance : evidence from Fortune 500 Corporations 2008-2017

Abstract

This study examines the relationship between whether a CEO is foreign-born or female and a series of organizational outcomes, including LGBT-friendly human resources policies and firm financial performance. For the empirical analysis I use a rich longitudinal data on the companies that are listed in Fortune 500 list and have scored on corporate equality index list over a 10-year period. Corporate equality index is used as proxy for LGBT-friendly human resources policies, ROA and Tobin’s Q are used as proxies for firm financial performance.

The empirical analysis applies ordinary least square regressions and fixed effects regressions. I find a positive correlation between foreign-born CEOs/female CEOs and firm’s corporate equality index score. This association disappears, however, once I control for unobserved firm-specific characteristics. I further find that the interaction between female CEOs and organization’s mimetic behavior is contribute to the advancement of LGBT-friendly human resources policies. In addition to LGBT-friendly human resources policies, my findings suggest that being a foreign-born CEO or not is positively correlated to firm’s Tobin’s Q, the positive correlation disappears after controlling for firm fixed effects. In my sample, I don’t observe a significant positive correlation between female CEOs and firm performance. Finally, my findings suggest that the interaction between foreign-born CEOs and firm internationalization strategy has significant positive effect on firm’s ROA.