Hiring Your Friends: Evidence from the Market for Financial Economists

44 Pages Posted: 24 Aug 2017 Last revised: 9 May 2019

See all articles by Charles J. Hadlock

Charles J. Hadlock

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management

Joshua R. Pierce

University of Alabama Culverhouse College of Commerce

Multiple version iconThere are 2 versions of this paper

Date Written: May 6, 2019

Abstract

We study connections in academic hiring in a sample of finance doctoral graduates. Departments hire individuals with school connections to other recently hired faculty at a significantly greater rate than is expected. Similarly, schools exhibit an elevated propensity to hire individuals with names that indicate a similar ethnic background to incumbent department members. School-connected hires tend to publish at a significantly higher rate than expected, a finding that is robust to a large number of model modifications and is stronger in more research-intensive departments. The evidence on school connections appears highly consistent with an employer information benefit from hiring based on school connections. Ethnic-connected hires tend to publish at lower-than-predicted rates when controlling for hiring-school characteristics, but this finding is not robust to the inclusion of hiring-school fixed effects. This evidence suggests that the possible information benefits of school-connected hiring do not immediately extend to other types of connections.

Keywords: Referrals, connections, job matching, information, favoritism

JEL Classification: J20, J44, G00

Suggested Citation

Hadlock, Charles J. and Pierce, Joshua R., Hiring Your Friends: Evidence from the Market for Financial Economists (May 6, 2019). Available at SSRN: https://ssrn.com/abstract=3024091 or http://dx.doi.org/10.2139/ssrn.3024091

Charles J. Hadlock (Contact Author)

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management ( email )

315 Eppley Center
East Lansing, MI 48824-1121
United States
517-353-9330 (Phone)
517-432-1080 (Fax)

Joshua R. Pierce

University of Alabama Culverhouse College of Commerce ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

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