Diagnosing Discrimination: Stock Returns and CEO Gender
AbstractA vast labour literature has found evidence of a 'glass ceiling', whereby women are under-represented among senior management. A key question remains the extent to which this reflects unobserved differences in productivity, preferences, prejudice, or systematically biased beliefs about the ability of female managers. Disentangling these theories would require data on productivity, on the preferences of those who interact with managers, and on perceptions of productivity. Financial markets provide continuous measures of the market’s perception of the value of firms, taking account of the beliefs of market participants about the ability of the men and women in senior management. As such, financial data hold the promise of potentially providing insight into the presence of mistake-based discrimination. Specifically if female-headed firms were systematically under-estimated, this would suggest that female-headed firms would outperform expectations, yielding excess returns. Examining data on S&P 1500 firms over the period 1992-2004 I find no systematic differences in returns to holding stock in female-headed firms, although this result reflects the weak statistical power of our test, rather than a strong inference that financial markets either do or do not under-estimate female CEOs.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5507.
Date of creation: Feb 2006
Date of revision:
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Other versions of this item:
- Justin Wolfers, 2006. "Diagnosing Discrimination: Stock Returns and CEO Gender," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 531-541, 04-05.
- Wolfers, Justin, 2006. "Diagnosing Discrimination: Stock Returns and CEO Gender," IZA Discussion Papers 1944, Institute for the Study of Labor (IZA).
- Justin Wolfers, 2006. "Diagnosing Discrimination: Stock Returns and CEO Gender," NBER Working Papers 11989, National Bureau of Economic Research, Inc.
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- G3 - Financial Economics - - Corporate Finance and Governance
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
- J4 - Labor and Demographic Economics - - Particular Labor Markets
- J7 - Labor and Demographic Economics - - Labor Discrimination
- K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-02-19 (All new papers)
- NEP-BEC-2006-02-19 (Business Economics)
- NEP-FMK-2006-02-19 (Financial Markets)
- NEP-LAW-2006-02-19 (Law & Economics)
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4280-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
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