Working Paper: NBER ID: w28766
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; Firm Performance; Managerial Characteristics; Nazi Germany; Jewish Managers
JEL Codes: D22; E60; G30; J7; J71; M12; N24; N34; N8
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) | decline in stock prices (G10) |
| 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 drop (G19) |
| loss of Jewish managers (J63) | decline in stock prices (G10) |
| loss of Jewish managers (J63) | decline in dividends (G35) |
| loss of Jewish managers (J63) | decline in returns on assets (G32) |
| loss of Jewish managers (J63) | aggregate market valuation drop (G19) |