Working Paper: CEPR ID: DP13089
Authors: Kilian Huber; Volker Lindenthal; Fabian Waldinger
Abstract: Large-scale increases in discrimination can lead to dismissals of highly qualified managers. We investigate how expulsions of senior Jewish managers, due to rising discrimination in Nazi Germany, affected large corporations. Firms that lost Jewish managers experienced persistent reductions in stock prices, dividends, and returns on assets. Aggregate market value fell by roughly 1.8 percent of German GNP because of the expulsions. Managers who served as key connectors to other firms and managers who were highly educated were particularly important for firm performance. The findings imply that individual managers drive firm performance. Discrimination against qualified business leaders causes first-order economic losses.
Keywords: discrimination; managers; firms; nazi germany; aryanizations
JEL Codes: J7; J71; N8; N24; N34; G30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| expulsion of Jewish managers (J63) | significant and persistent reductions in stock prices for affected firms (G32) |
| expulsion of Jewish managers (J63) | decline in dividends (G35) |
| expulsion of Jewish managers (J63) | decline in returns on assets (G32) |
| expulsion of Jewish managers (J63) | aggregate market valuation of firms listed in Berlin fell by 18% of Germany's GNP (N14) |
| loss of highly qualified managers (J63) | substantial economic losses (F69) |