Board gender diversity, CEO power and LGBTQ-supportive corporate policies

This study investigates the effect of two key corporate governance mechanisms, board gender diversity, chief executive officer (CEO) power, and their interactions on firms’ implementation of lesbian, gay, bisexual, transgender, and queer (LGBTQ)-supportive policies. Using 348 Fortune 500 firms from 2003–2023, our study reveals that the presence of three or more female directors on the board is positively associated with LGBTQ-supportive policies. We also find that CEO formal (informal) power has a positive (negative) impact on LGBTQ-supportive policies. Lastly, we document that whereas the effects of the interactions of CEO formal power with both the gender diversity measures are positive, the interactions between CEO informal power and gender diversity measures: critical mass and token are positive and negative respectively. Overall, the results suggest that CEO power could act as a double-edged sword, and a high female director representation reduces the negative effect of CEO informal power on LGBTQ-supportive policy implementations. • The study examines whether board gender diversity and CEO power could explain firms’ implementation of LGBTQ supportive policies. • The presence of a critical mass of three or more female directors is positively linked to firm LGBTQ-supportive policies, while a token presence of one or two female directors has no effect on such policy implementations. • CEO formal power has a favourable impact on LGBTQ-friendly policies, while CEO informal power has a negative effect on such policy implementations. • CEO power acts as a double-edged sword, and presence of critical mass of female directors could moderate the negative effect of CEO informal power on LGBTQ policies.