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

79 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

Date Written: October 2019

Abstract

We study whether antisemitic discrimination in Nazi Germany had economic effects. Specifically, we investigate how the forced removal of Jewish managers affected large German firms. We collect new data from historical sources on the characteristics of senior managers, stock prices, dividends, and returns on assets for firms listed on the Berlin Stock Exchange. After the removal of the Jewish managers, the senior managers at affected firms had fewer university degrees, less experience, and fewer connections to other firms. The loss of Jewish managers significantly and persistently reduced the stock prices of affected firms for at least 10 years after the Nazis came to power. We find particularly strong reductions for firms where the removal of the Jewish managers led to large decreases in managerial connections to other firms and in the number of university-educated managers. Dividend payments and returns on assets also declined. A back-of-the-envelope calculation suggests that the aggregate market valuation of firms listed in Berlin fell by 1.78 percent of German GNP. These findings imply that discrimination can lead to significant economic losses and that individual managers can be key to the success of firms.

Keywords: "Aryanizations", discrimination, firms, Managers, Nazi Germany

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 (October 2019). 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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