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When Harry Fired Sally: The Double Standard in Punishing Misconduct

Author

Listed:
  • Egan, Mark L.

    (University of MN)

  • Matvos, Gregor

    (University of Chicago)

  • Seru, Amit

    (Stanford University)

Abstract

We examine gender discrimination in the financial advisory industry. We study a less salient mechanism for discrimination, firm discipline following missteps. There are substantial differences in the punishment of misconduct across genders. Although both female and male advisers are disciplined for misconduct, female advisers are punished more severely. Following an incidence 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 punishment despite engaging in less costly misconduct and despite a lower propensity towards repeat offenses. Relative to women, men are three times as likely to engage in misconduct, are twice as likely to be repeat offenders, and engage in misconduct that is 20% costlier. Evidence suggests that the observed behavior is not driven by productivity differences across advisers. Rather, we find supporting evidence for taste-based discrimination. For females, a disproportionate share of misconduct complaints is initiated by the firm, instead of customers or regulators. Moreover, there is significant heterogeneity among firms. Firms with a greater percentage of male executives/owners at a given branch tend to punish female advisers more severely following misconduct and also tend to hire fewer female advisers with past record of misconduct.

Suggested Citation

  • Egan, Mark L. & Matvos, Gregor & Seru, Amit, 2017. "When Harry Fired Sally: The Double Standard in Punishing Misconduct," Research Papers 3510, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:3510
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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