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Discrimination, Managers, and Firm Performance: Evidence from “Aryanizations” in Nazi Germany

Author

Listed:
  • 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.

Suggested Citation

  • Kilian Huber & Volker Lindenthal & Fabian Waldinger, 2021. "Discrimination, Managers, and Firm Performance: Evidence from “Aryanizations” in Nazi Germany," NBER Working Papers 28766, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28766
    Note: CF DAE LS ME POL
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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-
    • N8 - Economic History - - Micro-Business History

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