When Harry Fired Sally: The Double Standard in Punishing Misconduct, Mark L. Egan, Gregor Matvos, Amit Seru – #23242 (CF LS)
Abstract:
We examine gender discrimination in the financial advisory industry.
We study a less salient mechanism for discrimination, firm discipline
following missteps. There are substantial differences in the
punishment of misconduct across genders. Although both female and
male advisers are disciplined for misconduct, female advisers are
punished more severely. Following an incidence of misconduct, female
advisers are 20% more likely to lose their jobs, and 30% less likely
to find new jobs relative to male advisers. Females face harsher
punishment despite engaging in less costly misconduct and despite a
lower propensity towards repeat offenses. Evidence suggests that the
observed behavior is not driven by productivity differences across
advisers. Rather, we find supporting evidence for taste-based
discrimination. For females, a disproportionate share of misconduct
complaints is initiated by the firm, instead of customers or
regulators. Moreover, there is significant heterogeneity among
firms. Firms with a greater percentage of male executives/owners at
a given branch, tend to punish female advisers more severely
following misconduct, and also tend to hire fewer female advisers
with past record of misconduct.