Diagnosing Discrimination: Stock Returns and CEO Gender

Justin Wolfers

No 1944, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A vast labor 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: discrimination; excess returns; statistical discrimination; event study; chief executive officer; CEOs; female CEOs (search for similar items in EconPapers)
JEL-codes: G14 G3 J16 J4 J7 K31 M5 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2006-01
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 (122)

Published - published in: Journal of the European Economic Association, 2006, 4 (2-3), 531-541

Downloads: (external link)
https://docs.iza.org/dp1944.pdf (application/pdf)

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:iza:izadps:dp1944

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().