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<p>We examine whether firms reward ethical leadership by linking corporate LGBTQ+ friendliness to CEO compensation. Using comprehensive data from publicly traded firms from the United States, we find a strong positive relation, indicating that boards actively incentivize leaders who advance inclusivity. The effect is concentrated in firms with high integrity, transparent reporting, and responsible environmental conduct, consistent with stakeholder and stewardship theories and inconsistent with rent-extraction motive. Moreover, boards with younger-generation directors amplify this relation, reflecting evolving governance norms that value ethical leadership. Overall, our evidence positions workplace inclusivity as a strategic asset that shapes executive pay design and reinforces responsible corporate governance.</p>

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Rewarding Ethical Leadership: Corporate LGBTQ+ Friendliness and CEO Compensation

  • 期刊论文

  • 发表日期：

    2026年2月2日

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  • Ashrafee Hossain,
  • Abdullah-Al Masum,
  • Samir Saadi

摘要

We examine whether firms reward ethical leadership by linking corporate LGBTQ+ friendliness to CEO compensation. Using comprehensive data from publicly traded firms from the United States, we find a strong positive relation, indicating that boards actively incentivize leaders who advance inclusivity. The effect is concentrated in firms with high integrity, transparent reporting, and responsible environmental conduct, consistent with stakeholder and stewardship theories and inconsistent with rent-extraction motive. Moreover, boards with younger-generation directors amplify this relation, reflecting evolving governance norms that value ethical leadership. Overall, our evidence positions workplace inclusivity as a strategic asset that shapes executive pay design and reinforces responsible corporate governance.