Events

Professor Joanna Wu
Susanna and Evans Y. Lam Professor of Business Administration
Simon Business School
University of Rochester

We examine whether firms apply partisan standards in responding to employee financial misconduct. Using detailed individual-level data on financial advisers, we find that, following misconduct, advisers who are political minorities at their firms are significantly more likely to depart than non-minority transgressing colleagues at the same firm and time — a pattern we term “partisan punishment standards.” This pattern is especially pronounced at firms with low internal information quality. We also document “partisan reporting standards”: firms are more likely to publicly disclose misconduct by political minority advisers while remaining relatively silent in other cases. Importantly, political minority advisers are no more likely to commit misconduct or to reoffend. Firms that exhibit partisan punishment practices subsequently experience slower growth. These findings align with models of discrimination based on taste or biased beliefs.