Drawing on resource based theory, we analyse the relationship between the presence of LGBT executives on the leadership of a firm with its financial performance and market value. The existence of LGBT executives is considered to be associated with the existence of employee and customer goodwill towards LGBT-friendly policies and practices and lead to human capital and reputational benefits. Our findings suggest that firms with LGBT executives outperform their counterparts in terms of both financial performance and market value. However, after further investigation, we found that there is no direct effect on firms’ market value, rather an indirect one via the effect on financial performance. We interpret this as suggesting that although employee and customer goodwill towards LGBT-friendly policies and practices do directly result in better financial performance and indirectly lead to better market performance, investors are still indifferent to these benefits and/or insensitive to LGBT rights.

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financial performance,LGBT,market value,resource based theory,sexual orientation and identity,simultaneous equations