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

86 Pages Posted: 1 Dec 2020 Last revised: 4 Dec 2020

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: November 1, 2020

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

Huber, Kilian and Lindenthal, Volker and Waldinger, Fabian, Discrimination, Manager, and Firm Performance: Evidence from "Aryanizations" in Nazi Germany (November 1, 2020). Chicago Booth Research Paper No. 20-50, University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-171, Available at SSRN: https://ssrn.com/abstract=3737788 or http://dx.doi.org/10.2139/ssrn.3737788

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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