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

88 Pages Posted: 6 Aug 2018 Last revised: 23 Oct 2019

See all articles by Kilian Huber

Kilian Huber

University of Chicago - Booth School of Business

Volker Lindenthal

Ludwig Maximilian University of Munich (LMU)

Fabian Waldinger

University of Warwick - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 2020

Abstract

Large-scale increases in discrimination can lead to dismissals of highly qualified business leaders who belong to targeted groups. We study how the forced removal of Jewish managers in Nazi Germany, caused by surging antisemitism, affected large firms. The loss of Jewish managers led to large and persistent stock price reductions for affected firms. Dividend payments and returns on assets also declined. The effect of losing Jewish managers was distinct from other shocks that hit German firms after 1933, for example Nazi policies or firm-specific demand shocks. A back-of-the-envelope calculation suggests that the aggregate market valuation of firms listed in Berlin fell by 1.8 percent of German GNP because of the expulsion of Jewish managers. The findings imply that discrimination can lead to persistent and first-order economic losses.

JEL Classification: G30, J7, J71, N24, N34, N8

Suggested Citation

Huber, Kilian and Lindenthal, Volker and Waldinger, Fabian, Discrimination, Managers, and Firm Performance: Evidence from "Aryanizations" in Nazi Germany (December 2020). CEPR Discussion Paper No. DP13089, Available at SSRN: https://ssrn.com/abstract=3226862

Kilian Huber (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Volker Lindenthal

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

HOME PAGE: http://https://sites.google.com/site/volkerlindenthal

Fabian Waldinger

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

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