ACADEMIC FINANCE: REWARDS, REPLACEMENTS, AND RENEWALS

The future of the academic finance profession's intellectual growth has been threatened by the exodus of academicians to Wall Street. Ultimately, the mutual interactions of many individuals will lead to an equilibrium in the academic profession's own labor market as in any other. However,...

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Bibliographic Details
Published in:The Financial review (Buffalo, N.Y.) N.Y.), 1987-08, Vol.22 (3), p.2-11
Main Author: Miller, Merton H.
Format: Article
Language:English
Subjects:
Colleges & universities
Personnel policies
Recruitment
Teachers
Wages & salaries
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Summary:The future of the academic finance profession's intellectual growth has been threatened by the exodus of academicians to Wall Street. Ultimately, the mutual interactions of many individuals will lead to an equilibrium in the academic profession's own labor market as in any other. However, persistent, substantial deviations from the long-run ratio -- the ratio of the average starting salaries of master of business administration (MBA) graduates in finance to those of PhD assistant professors of finance -- in either direction will prompt individuals to make a move. The surging demand in Wall Street and in the financial services industry in general has driven up MBA starting salaries and has pushed, or at least is threatening to push, the PhD/MBA starting salary ratio below its critical value of one. Limitations on the ability to raise finance salaries include: 1. university-wide mandated salary scales, and 2. within-field junior-senior pay differentials. Since the business schools cannot be counted on to provide the needed flow of new junior finance faculty, faculties can draw from the economics departments.
ISSN:0732-8516
1540-6288
DOI:10.1111/j.1540-6288.1987.tb01145.x