Why LGBTQ+ leadership might be boosting company value

When Apple CEO Tim Cook publicly announced that he is gay, he didn’t just make headlines—he made history. While his declaration had little impact on Apple’s financials, it gave visibility to LGBTQ+ leadership in the corporate world. Diversity in the boardroom regarding including more women and racialized people is already a hot topic. But when it comes to LGBTQ+ representation, the conversation is still catching up, and many leaders remain invisible. 

A recent study led by Esade PhD graduate Ryan Federo and Visiting Professor Ruth Aguilera takes a fresh look at this underexplored area. Their research, published in Human Resource Management, investigates whether having openly LGBTQ+ directors on company boards actually makes a difference to how firms are perceived—and how they perform. The authors analyzed a unique dataset of US firms with publicly known LGBTQ+ directors, combining board-level demographic data with measures of firm value and stakeholder perception. 

Companies with visible LGBTQ+ board directors tend to outperform their competitors in several key areas

The results? Visibility matters. LGBTQ+ directors signal to the market that a company is more socially responsible, which in turn can positively impact firm value. But the reality behind that signal might be more complex than it seems. 

LGBTQ+ directors and corporate performance

Federo and Aguilera’s new research adds a compelling layer to the growing body of evidence that diversity at the top matters not just for fairness but for business. The study found that companies with visible LGBTQ+ board directors tend to outperform their competitors in several key areas. 

LGBTQ+ directors, like other underrepresented groups, often bring a heightened awareness of stakeholder interests and ethical responsibility. That perspective helps boards better oversee company decisions and long-term strategy. In short, LGBTQ+ presence on the board equates to stronger corporate governance. 

There is a nuanced correlation with financial performance too. Having LGBTQ+ directors doesn’t directly boost a company’s bottom line. However, it does send a potent signal to the market: this is a company that values inclusion, openness, and progress. That signal can enhance a firm’s reputation, strengthen relationships with investors, and ultimately contribute to firm value. Effectively, it’s good marketing. 

Diverse leadership teams tend to make more innovative, balanced decisions

“While the visibility of LGBTQ+ directors does not drive specific ESG pillars, it boosts perceptions of Corporate Social Performance (CSP), and CSP, in turn, mediates the link between board diversity and firm value,” note the authors. 

The benefits go beyond how the business is perceived. Diverse leadership teams—whether that diversity is based on gender, race, or sexual orientation—tend to make more innovative, balanced decisions. LGBTQ+ directors may be more inclined to think unconventionally, and more likely to challenge groupthink and bring fresh insights. This matters in areas like risk management, where different life experiences can lead to enhanced foresight and fewer blind spots. 

Previous research on board diversity has mostly focused on gender or race. And while those aspects remain crucial, LGBTQ+ representation is often overlooked—partly because it’s less visible or not often voluntarily disclosed. This study helps fill that gap, with its discovery that LGBTQ+ inclusion is not just a matter of representation—it can be a strategic asset. As Federo and Aguilera argue, “The visibility of LGBTQ+ directors can influence stakeholder perceptions and firm outcomes in meaningful ways.” 

The human resource management challenge

In a world where board members’ sexual orientation is rarely disclosed, this creates a paradox: companies may enjoy a reputational boost when LGBTQ+ identities are known, but the same identities can remain invisible due to lingering stigma. Many LGBTQ+ professionals still feel pressure to stay closeted. Businesses are left walking a fine line between encouraging diverse employees to ‘come out’ while not wanting to pressure them into disclosing personal and private information. 

Tokenism is a further risk. “We caution against superficial inclusion,” the authors note. Simply appointing a LGBTQ+ director for reputation advancement—without granting them a real voice or influence—can undermine both the director’s experience and the firm’s integrity. Worse still, it may conceal deeper organizational issues, offering the illusion of progress without meaningful change. 

An LGBTQ+ director's message is also important for internal staff, as it shapes workplace culture

These challenges can be transformed into an opportunity. Firms that embrace LGBTQ+ inclusion authentically—by adopting inclusive cultures, offering an environment of trust, and valuing diverse perspectives—stand to gain not only reputational capital but a genuine strategic advantage. “Greater board diversity enables a broader understanding of stakeholder concerns and enhances decision-making quality,” say Federo and Aguilera. 

In short, LGBTQ+ representation isn’t just a box-ticking exercise. It’s a chance for companies to rethink who gets a seat at the table—and what that individual can bring.  

An LGBTQ+ director's message is also important for internal staff, as it shapes workplace culture. Vivienne Ming, a prominent transgender CEO and director, once said in an interview: “If a company doesn't have diversity in the C-suite or on the board, female, ethnic and LGBTQ+ workers will think: why put in those extra hours on the weekend if it's not going to pay off?”  

Will the future bring more inclusive boards?

The fact is that LGBTQ+ representation in boardrooms remains limited. But there are signs that the tide is cautiously turning. The corporate world is gradually waking up to the value of boardroom diversity—not just as a moral imperative, but as an indication of forward-thinking leadership. The Ferrero and Aguilera study points to a growing recognition among some companies and investors that visible LGBTQ+ directors can enhance perceptions of corporate responsibility and strengthen stakeholder relationships. This subtle shift can help to chip away at long-standing invisibility. 

Policy and culture are also playing a role. As companies expand their definitions of diversity to include sexual orientation and gender identity, board composition is gradually becoming more inclusive. At the same time, younger generations of employees and consumers increasingly expect firms to transparently demonstrate inclusion—not just in their marketing, but in who actually sits at the top. 

The positive influence of LGBTQ+ directors

Diversity is more than a buzzword in today's business landscape—it’s a strategic advantage. The presence of LGBTQ+ directors on company boards not only signals inclusivity but also shapes how stakeholders perceive the firm’s social responsibility. And that perception matters: it can boost reputation, enhance trust, and ultimately increase firm value. 

LGBTQ+ directors help companies look more socially responsible, which can boost their value—but it’s the company’s overall social responsibility, not just specific ESG actions, that makes the difference. 

As part of our broader work on diversity, equity and inclusion (DEI), we at Do Better have also explored how recent backlash and rollback efforts are threatening DEI progress. Ensuring LGBTQ+ voices are not sidelined in this climate will be key to building resilient, representative organisations.