Production in the finance literature, institutional reputation, and labor mobility in academia: a global perspective

Financial Management (Financial Management Association), Winter, 2002 by Kam C. Chan, Carl R. Chen, Thomas L. Steiner

Academic institutions are ranked on a global scale in terms of finance literature productivity. US institutions are dominant in academic publishing although European and Asian institutions have improved sign significantly in recent years. Additionally, we study the relationship between the quality of human capital and the likelihood of an upward career move. Our results show that an individual relocates to a higher-ranked institution exhibits a research record that is two times stronger than that of an average faculty member at the destination institution. We further model the probability of an upward move in the academic labor market as a function of human capital using an ordered logistic model. We find that publications in sixteen core journals, publications in three top journals, and the rank of the Ph.D. granting institution enhance the probability of moving to a higher ranked institution. On the other hand, the length of teaching experience decreases this probability.

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Research productivity has always been a topic of substantial interest to the academic community. These studies can be found in many disciplines. Some examples are Niemi (1987) and Borokhovich, Bricker, Brunarski, and Simkins (1995) in finance, Brown (1996) in accounting, Conboy, Dusansky, Drukker, and Kildegaard (1995), Scott and Mitias (1996), and Collins, Cox, and Stango (2000) in economics. There are several possible reasons for the interest in this topic. First, promotion/tenure, faculty compensation, and resource allocation decisions in academic institutions are often dependent on the productivity of the faculty, and the quality and quantity of publications that the faculty produce are factors used to measure this productivity (Gomez-Mejia and Balkin 1992). Second, the ranking of academic institutions draws attention from faculty position applicants, college and graduate school bound students, and potential university donors. Popular publications, such as US News and World Report, offer guidance to thes e individuals by ranking colleges and universities with academic reputation among the ranking criteria. A recent article in the Chronicle of Higher Education (June 1, 2001, p.A8) reports that Ohio State University "taxes" departments in order to distinguish selected departments within their school as "top-notch". "Administrators (at Ohio State) believe the rankings are important because they give graduate students, the public, and state legislators a benchmark. 'They are an indication of what league you're in,' says Randall B. Ripley, Dean of the College of Social and Behavior Sciences." (p. A9)

Despite the interest in ranking academic programs, the assessments have consistently focused upon North American institutions. Moreover, few studies provide insights into other related issues beyond the ranking outcome. Therefore, the objective of our research is twofold. Our first objective is to study research productivity within the academic discipline of finance using a global sample of institutions. Globalization has reduced barriers in almost every sector of the economy and the academic arena is no exception. Moreover, an examination of ranking academic departments on a global scale is not without precedence. For example, in January 2001, the Financial Times published its world rankings of the top 100 MBA programs. However, their ranking study is confined to MBA programs, with data gathered through opinion surveys from participating MBA programs; consequently, their study does not provide an assessment of finance programs on a global scale which is one contribution of our study.

Our second objective is to study labor mobility within the finance profession. To the best of our knowledge, this has yet to be investigated. Although there are many factors that affect an individual's ability or desire to relocate and to receive an offer, our focus is limited to a more narrow aspect of labor mobility. We focus on how an individual's human capital impacts that individual's occupational mobility. The quality of human capital is difficult to quantify for many occupations, but in academia it is more feasible. This is because one of the major quality indicators in academia is a researcher's publication record and that record can be objectively quantified and measured. Consequently, our study allows us to examine the role that a researcher's publication record plays in moving from a lower ranked institution to a higher ranked institution. We use alternative research publication measures to proxy the quality of an individual's human capital. These measures include, for example, the total published pages in a set of 16 core finance journals, the per year published pages from the same set of finance journals, and the weighted number of articles in the top-3 finance journals.

Besides the uniqueness of our study in developing global rankings and in investigating labor mobility, further strengths of our study include a substantial sample period and a careful accounting of articles with respect to co-authorships, co-affiliations, and differences in average article lengths across journals. Our sample period extends from 1990 through 2001 while prior studies that rank institutions in finance have typically used more limited sample periods (e.g., 4-5 years). A benefit of our longer sample period is our ability to compare the research productivity during sub-sampling periods and, therefore, to assess a university's improvements in research productivity over time.