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When Harry Fired Sally: The Double Standard in Punishing Misconduct

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  • Mark L. Egan
  • Gregor Matvos
  • Amit Seru

Abstract

We examine gender differences in misconduct punishment in the financial advisory industry. We find evidence of a “gender punishment gap”: following an incident 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 outcomes despite engaging in misconduct that is 20% less costly and having a substantially lower propensity towards repeat offenses. The gender punishment gap in hiring and firing dissipates at firms with a greater percentage of female managers at the firm or local branch level. The gender punishment gap is not driven by gender differences in occupation (type of job, firm, market, or financial products handled), productivity, misconduct, or recidivism. We extend our analysis to explore the differential treatment of ethnic minority men and find similar patterns of “in-group” tolerance. Our evidence is inconsistent with a simple Bayesian model with profit maximizing firms and suggests instead that managers are more forgiving of missteps among members of their own gender/ethnic group.

Suggested Citation

  • Mark L. Egan & Gregor Matvos & Amit Seru, 2017. "When Harry Fired Sally: The Double Standard in Punishing Misconduct," NBER Working Papers 23242, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23242
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    More about this item

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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