Sexism, Culture, and Firm Value: Evidence from the Harvey Weinstein Scandal and the #MeToo Movement

During the revelation of the Harvey Weinstein scandal and the re-emergence of the #MeToo movement, firms with a non-sexist corporate culture, proxied by having women among the five highest paid executives, earn excess returns of 1.3% relative to firms without female top executives. These returns are driven by changes in investor preferences towards firms with a non-sexist culture. Institutional ownership increases in firms with a non-sexist culture after the Weinstein/#MeToo events, particularly for investors with larger holdings and investors with a lower ESG focus ex-ante. Firms without female top executives improve gender diversity after these events, particularly in more sexist states and in industries with few women executives. Our evidence attests to the value of having a non-sexist corporate culture, and indicates that changes in societal norms towards women are permeating into capital markets and corporations.