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

Kilian Huber, Volker Lindenthal and Fabian Waldinger

No 13089, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 (search for similar items in EconPapers)
JEL-codes: G30 J7 J71 N24 N34 N8 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-his and nep-hrm
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