Diagnosing Discrimination: Stock Returns and CEO Gender

Justin Wolfers

No 5507, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A vast labour literature has found evidence of a 'glass ceiling', whereby women are under-represented among senior management. A key question remains the extent to which this reflects unobserved differences in productivity, preferences, prejudice, or systematically biased beliefs about the ability of female managers. Disentangling these theories would require data on productivity, on the preferences of those who interact with managers, and on perceptions of productivity. Financial markets provide continuous measures of the market?s perception of the value of firms, taking account of the beliefs of market participants about the ability of the men and women in senior management. As such, financial data hold the promise of potentially providing insight into the presence of mistake-based discrimination. Specifically if female-headed firms were systematically under-estimated, this would suggest that female-headed firms would outperform expectations, yielding excess returns. Examining data on S&P 1500 firms over the period 1992-2004 I find no systematic differences in returns to holding stock in female-headed firms, although this result reflects the weak statistical power of our test, rather than a strong inference that financial markets either do or do not under-estimate female CEOs.

Keywords: Ceo pay; Ceos; Chief executive officer; Discrimination; Event study; Excess returns; Female ceos; Statistical discrimination (search for similar items in EconPapers)
JEL-codes: G14 G3 J16 J4 J7 K31 M5 (search for similar items in EconPapers)
Date: 2006-02
New Economics Papers: this item is included in nep-bec, nep-fin, nep-fmk and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (121)

Downloads: (external link)
https://cepr.org/publications/DP5507 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Diagnosing Discrimination: Stock Returns and CEO Gender (2006)
Working Paper: Diagnosing Discrimination: Stock Returns and CEO Gender (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5507

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5507

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().