Company's Workplace Policies Can Affect Its Stock Market Value

Miami University Ohio

Miami University researchers have found a correlation between a company's GLBT (gay, lesbian, bisexual, transgender) nondiscrimination policies and its stock market value. Their findings, published in the March-April issue of Human Resource Management, suggest that the stock prices of firms with more progressive GLBT policies outperform their competitors.

Joshua Schwarz, professor, and Peng Wang, assistant professor, both in the management department of Miami's Farmer School of Business, studied the Corporate Equality Index (CEI) scores of 258 firms from 2002-2005 and stock market performance from 2003-2006. Stock market performance measures were collected from multiple resources that provide consistent data such as the Standard & Poor's Research Insight 7.6, Wharton Research Data Services and Yahoo! Finance. They found industries with higher CEI scores generally outperformed industries with lower CEI scores in the stock market every year, except 2004.


"We found that the change in firms' standardized CEI scores between two consecutive years was positively associated with the change in firms' standardized stock price trend over the following year," Schwarz said. "Our results suggest that there is economic value in companies' efforts devoted to equal treatment for GLBT employees."

The researchers give several probable reasons for the outcome. Organizations that have GLBT nondiscrimination policies appear to promote a relatively more positive environment for workers, Schwarz said, and if GLBT workers perceive they are being cared for and treated fairly, they may be more productive. Also, economists might assume there is better distribution of talent among diverse employees.

"If the discriminating employer is not willing to consider GLBT applicants or, based on company policies, GLBT workers are not willing to apply, that employer will need to dig deeper into the straight applicant pool to hire a sufficient number of employees, which could result in lower quality employees," Peng said.

The third reason comes down to the bottom line. Firms with programs to protect GLBT workers may also enhance their reputations with potential customers and may increase companies' access to the GLBT consumer market. Just as they may prefer to be employed by firms that value diversity based on sexual orientation and gender-identity, they may likewise choose to purchase from such firms.

According to Schwarz and Wang, their research results suggest that more progressive GLBT nondiscrimination practices and policies contribute to sustaining a competitive advantage in the marketplace and are a legitimate business interest.

For the full abstract of the study, visit


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