Marriage equality for everyone? The business case for same sex marriage legislation

The impact of legislation in shaping social norms has captured both scholarly and practitioner attention in the past decades. However, limited understanding exists on how social legislation can create economic value for firms and thereby strengthen the business case for such legislation. We attempt to theorize and test this phenomenon in the context of marriage equality. We first attempt to understand the role of state-wise same-sex marriage social legislation on financial performance of firms headquartered in states where the legislation is passed. Adapting the model of institutional racism to the context of heterosexism, we then develop a framework to examine the role of societal-cultural, institutional, and individual factors in shaping the effect of state-wise same-sex marriage legislation on firm performance. In a sample of publicly traded U.S. firms, we conduct a difference-in-difference analysis to test and find support for our arguments.