When Harry Fired Sally: The Double Standard in Punishing Misconduct

91 Pages Posted: 19 Mar 2017 Last revised: 5 Jul 2023

See all articles by Mark Egan

Mark Egan

Harvard University - Business School (HBS); National Bureau of Economic Research (NBER)

Gregor Matvos

Northwestern University - Kellogg School of Management

Amit Seru

Stanford University

Multiple version iconThere are 2 versions of this paper

Date Written: March 2017

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

Egan, Mark and Matvos, Gregor and Seru, Amit, When Harry Fired Sally: The Double Standard in Punishing Misconduct (March 2017). NBER Working Paper No. w23242, Available at SSRN: https://ssrn.com/abstract=2935413

Mark Egan (Contact Author)

Harvard University - Business School (HBS) ( email )

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National Bureau of Economic Research (NBER) ( email )

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Gregor Matvos

Northwestern University - Kellogg School of Management ( email )

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Evanston, IL 60208
United States

HOME PAGE: http://https://sites.google.com/site/gmatvos/

Amit Seru

Stanford University ( email )

Stanford, CA 94305
United States

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