Sexism, Culture, and Firm Value: Evidence from the Harvey Weinstein Scandal and the #MeToo Movement

Abstract

During the revelation of the Harvey Weinstein scandal and the re-emergence of the #MeToo movement, firms with a non-sexist corporate culture, proxied by having women among the five highest paid executives, earn excess returns of 1.6% relative to firms without female top executives. Returns for firms with female top executives are substantially higher in industries with few women in executive positions and in states with greater sexism or a larger gender pay gap. These returns are driven by changes in investor preferences towards firms with a non-sexist culture. Institutional ownership increases in firms with a non-sexist culture after the Weinstein/#MeToo events, particularly for institutions with larger holdings and investors with a lower ESG focus ex-ante. Firms without female top executives improve gender diversity after these events, even in sexist states and in industries with few women executives. Our evidence attests to the value of having a non-sexist corporate culture.

Keywords: Culture, Sexism, Gender Equality, #MeToo, Valuation, Returns, Investor Preferences, Institutional Ownership, ESG

JEL Classification: M14, J16, G12, G30