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Huber, Kilian; Lindenthal, Volker and Waldinger, Fabian (July 2019): Discrimination, Managers, and Firm Performance: Evidence from “Aryanizations” in Nazi Germany. [PDF, 5MB]

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Large-scale increases in discriminatory attitudes can lead to the dismissal of highly qualifed 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 with certain qualifcations led to large and persistent stock price reductions for afected firms. Dividend payments and returns on assets also declined. A back-of-theenvelope calculation suggests that the aggregate market valuation of firms listed in Berlin fell by 1.8 percent of German GNP. The findings imply that discrimination can lead to persistent and first-order economic losses.

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