#MeToo meets the mutual fund industry: productivity effects of sexual harassment

Abstract

Sexual harassment, a widespread problem in the workplace, arguably keeps female employees from optimally employing their human capital. We show that removing or diminishing this friction improves productivity. Specifically, using the male-dominated fund industry as our testing ground, we show that productivity of female mutual fund managers significantly increased after the Harvey Weinstein scandal and the onset of the #MeToo movement. Evidence from lawsuits and organizational changes at several fund companies also suggests that reducing the threat of sexual harassment improves productivity. Our results have important implications for the policy debate on workforce diversity and costs of sexual harassment.

The Distribution of the Gender Wage Gap: An Equilibrium Model

“…It is our understanding that these types of aggregated data (which do not include firm-specific outputs) cannot distinguish between tastes and productivity. In fact the distinction is blurred given that discrimination in the shape of, for instance, workplace sexual harassment causes gender productivity differences (Folke and Rickne 2020;Cici et al 2021).…”

“…Thus the α 4,skl,occ,t share parameter we estimate could be capturing changes in discrimination over time or changes in real productivity. Empirically, real productivity and discrimination are also entangled: recent research literature has found that gender-based discrimination (harassment) has real productivity impacts (Folke and Rickne 2020;Cici et al 2021), see the related discussion in Section 1.1.…”

Mutual funds and gender equality in portfolio firms: Toward the sustainable development goals

“…Mutual fund managers that integrate gender equality‐related criteria in their investment processes could achieve different financial performance depending on the economic sector in which they invest. Previous literature examining the effect that the level of gender equality achieved by firms in which mutual funds invest has on the financial performance of their portfolios is scarce (Cici et al, 2021; Rao et al, 2020). To fill this gap, this study examines the effect of gender equality criteria on the financial performance of SDG‐related thematic mutual funds in the United States.…”

“…This study contributes to the previous literature in different ways. First, it considers several dimensions of gender equality, as described in the previous paragraph, while other studies have examined the effects of sexual harassment (Cici et al, 2021), gender diversity in the workforce (Peillex et al, 2021), and gender diversity on boards (Chapple & Humphrey, 2014). Second, it groups fund portfolios by SDG‐related sectors as well as considering fund portfolios that are diversified across sectors, thus enabling us to identify the contrasting relationships between fund financial performance and gender equity scores depending on the sector.…”

“…While many empirical studies have examined the effect of gender equality practices at the corporate level, finance literature examining the effect of gender equality criteria on the financial performance of funds is scarce. Specifically, Cici et al (2021) examine the performance of female fund managers after the Harvey Weinstein scandal and the upsurge in sexual harassment-related friction, finding empirical evidence that such harassment negatively affects female managers' productivity. Focusing on firm portfolios, Peillex et al (2021) compare the financial performance of the MSCI Japan Empowering Women Index to the conventional parent index, achieving similar results.…”