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CEP Discussion Paper
Discrimination, Managers, and Firm Performance: Evidence from “Aryanizations” in Nazi Germany
Kilian Huber, Volker Lindenthal and Fabian Waldinger January 2019
Paper No' CEPDP1599:
Full Paper (pdf)

JEL Classification: J71; M21; N84

Tags: discrimination; antisemitism; firms; managers; stock prices; nazi germany

Large-scale increases in discriminatory attitudes can lead to the dismissal of highly qualified 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 qualifications led to large and persistent stock price reductions for affected firms. 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 1.8 percent of German GNP. The findings imply that discrimination can lead to persistent and first-order economic losses.