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% 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. ? 2021 by The University of Chicago. All rights reserved.

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1 September 2021

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Journal of Political Economy 129(9) , pp.2455-2503, 2021

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DOI: 10.1086/714994

https://www.journals.uchicago.edu/doi/10.1086/714994

This Journal article is published under the centre's Growth programme.