Working Paper: NBER ID: w23242
Authors: Mark L. Egan; Gregor Matvos; Amit Seru
Abstract: We examine gender differences in misconduct punishment in the financial advisory industry. We find evidence of a “gender punishment gap”: following an incident of misconduct, female advisers are 20% more likely to lose their jobs and 30% less likely to find new jobs relative to male advisers. Females face harsher outcomes despite engaging in misconduct that is 20% less costly and having a substantially lower propensity towards repeat offenses. The gender punishment gap in hiring and firing dissipates at firms with a greater percentage of female managers at the firm or local branch level. The gender punishment gap is not driven by gender differences in occupation (type of job, firm, market, or financial products handled), productivity, misconduct, or recidivism. We extend our analysis to explore the differential treatment of ethnic minority men and find similar patterns of “in-group” tolerance. Our evidence is inconsistent with a simple Bayesian model with profit maximizing firms and suggests instead that managers are more forgiving of missteps among members of their own gender/ethnic group.
Keywords: gender; misconduct; punishment; financial advisory; discrimination
JEL Codes: D18; G24; G28; J71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Gender (J16) | Job Separation (J63) |
| Misconduct (K42) | Job Separation (J63) |
| Gender (J16) | Duration Out of Industry (L89) |
| Job Separation (J63) | Finding New Employment (J63) |
| Gender Composition of Managers (J16) | Gender Punishment Gap (J16) |
| Misconduct Severity (K42) | Gender Punishment Gap (J16) |
| Ethnic Minority Men (J15) | Gender Punishment Gap (J16) |