Source: faculty-gsb.stanford.edu
Topic: Stock Investment
Sort Desciption: I analyze the effect of stock market shocks on the careers of MBAs. I show that, just. as investment bankers are key drivers of financial markets, ...
Content Inside: The Making of an Investment Banker: Stock Market Shocks, Career Choice, and Lifetime Income ∗ Paul Oyer †March 19, 2007 Abstract I analyze the effect of stock market shocks on the careers of MBAs. I show that, just as investment bankers are key drivers of financial markets, market shocks have important and lasting effects on who makes those markets. Stock market conditions while MBA students are in school have a large effect on whether they go directly to Wall Street upon graduation. Starting on Wall Street immediately upon graduation causes a person to be more likely to work there later and to earn, on average, substantially more money. The empirical results suggest that investment bankers are largely “made†by circumstance rather than being “born†to work on Wall Street. ∗ I thank Ken Corts, Vicente Cunat, Liran Einav, Eric Forister, Campbell Harvey, Dan Kessler, David Robinson, Kathryn Shaw, Andy Skrzypacz, Ilya Strebulaev, Till von Wachter, Jeff Zwiebel, anonymous referees, and semi- nar participants at Berkeley, Chicago, Dartmouth, Middlebury, IZA/SOLE, Gerzensee, and the AFA meetings for comments. I thank Ed Lazear for both sharing the MBA survey data and useful suggestions. I am also grateful to Stanford’s Vic Menen and Andy Chan and to Wharton’s Christopher Morris and Jennifer Sheffler for providing historical placement information for their schools and to Kenneth Wong for research assistance. †Stanford University Graduate School of Business and NBER, 518 Memorial Way, Stanford, CA 94305-5015. e-mail: pauloyer@stanford.edu. Phone: (650) 736-1047. “Back in January 1987. Wall Street was booming. When the job offers rolled in, students played one house against another. They were the supply, and the demand was strong. After the crash, the receptions that had once played to packed houses were drawing a few dozen students. Out went the tenderloin on toast and the shrimp; in came the dips and the hot dogs on toothpicks. ...
