When Experience Mitigates Gender in Punishment for Misconduct on Wall Street

I examine how different types of misconduct affect the careers of professionals in the U.S. securities industry and investigate the disparities in labor market reactions to violations of professional norms. I specifically examine the career consequences of customer-facing misconduct (i.e., misconduct that primarily harms the customers) and regulator-facing misconduct (i.e., misconduct that primarily harms the regulators), and investigate whether these career consequences depend on the experience and gender of those who got caught for misconduct. Analyzing data from a large random sample of U.S. stockbrokers, I find that customer-facing misconduct is punished, but regulator-facing misconduct is rewarded by the labor market. I also show that greater tenure weakens the punishment after customer-facing misconduct and that it weakens the reward after regulator-facing misconduct. Furthermore, I find evidence that male brokers later in their careers are punished more for customer-facing misconduct and punished less for regulator-facing misconduct than female brokers later in their careers. Together, these findings advance our understanding of what tenure means for women versus men pertaining to punishment for misconduct, and what punishment regime might be more effective in inhibiting misconduct.