Abstract

http://ssrn.com/abstract=879756
 
 

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Diagnosing Discrimination: Stock Returns and CEO Gender


Justin Wolfers


University of Michigan at Ann Arbor - Department of Economics; The Ford School of Public Policy, University of Michigan; The Brookings Institution; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Kiel Institute for the World Economy

January 2006

IZA Discussion Paper No. 1944

Abstract:     
A vast labor 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.

Number of Pages in PDF File: 19

Keywords: discrimination, CEOs, chief executive officer, event study, statistical discrimination, excess returns, female CEOs

JEL Classification: G14, G3, J16, J4, J7, K31, M5

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Date posted: January 30, 2006  

Suggested Citation

Wolfers, Justin, Diagnosing Discrimination: Stock Returns and CEO Gender (January 2006). IZA Discussion Paper No. 1944. Available at SSRN: http://ssrn.com/abstract=879756

Contact Information

Justin Wolfers (Contact Author)
University of Michigan at Ann Arbor - Department of Economics ( email )
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HOME PAGE: http://www.nber.org/~jwolfers
The Ford School of Public Policy, University of Michigan ( email )
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The Brookings Institution ( email )
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Institute for the Study of Labor (IZA)
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Centre for Economic Policy Research (CEPR)
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CESifo (Center for Economic Studies and Ifo Institute) ( email )
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Kiel Institute for the World Economy ( email )
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