Diagnosing Discrimination: Stock Returns and CEO Gender
AbstractA vast labor literature has found evidence of a %u201Cglass ceiling%u201D, 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%u2019s perception of the value of firms, taking account of the beliefs of market participants about the ability of 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11989.
Date of creation: Jan 2006
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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).
- Wolfers, Justin, 2006. "Diagnosing Discrimination: Stock Returns and CEO Gender," CEPR Discussion Papers 5507, C.E.P.R. Discussion Papers.
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-02-26 (All new papers)
- NEP-BEC-2006-02-26 (Business Economics)
- NEP-FMK-2006-02-26 (Financial Markets)
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