Corporate sexual orientation equality and dividend payout

We examine the effect of a firm's Lesbian, Gay, Bisexual, and Transgender (LGBT)-friendly policies on its dividend payout and find a significantly positive association. We propose two alternate arguments to explain this association. The disbursement of higher dividends could potentially alleviate the perception of agency costs arising from better treatment of LGBT employees. Alternatively, firms could pay higher dividends (i.e. deplete cash) to increase their bargaining power with labor. Our results support the agency argument. Our findings are robust to alternative models and measures.