The Academic Finance Job Market

I recently saw this analysis of the job market for econ Ph.D.s on the Economist's Free Exchange site:

On the debit side, much attention focused on the fact that the AEA-run website, where potential employers of PhD economists advertise their positions, has added a new section called "Suspended or Cancelled Listings". Here it is noted that a "non-trivial economic downturn" has forced some employers to suspend or cancel job searches. As of December 28th, a week before the actual interviews, 84 previously advertised searches had been called off, representing 5% of the number of jobs available by the reckoning of the director of the AEA, John Siegfried.

Read the whole thing here.

Since the Financial Rounds readership includes a pretty good number of finance academics, I thought I'd share some observations on the Academic Finance job market. Unlike the Econ one (which takes place pretty much at the AEA meeting), the Finance market is 2-tiered. The first part takes place at the Financial Management Association (FMA) annual meeting in early October, and the second part happens at the American Finance Association (AFA) annual meeting that takes place in conjunction with the AEA meeting in early January.

The very top schools (the top-20 or so) tend to interview only at the AFA (there are a few exceptions, but only a few). But the 2nd-tier and third-tier schools for the most part attend only the FMA meeting (the upper-tier of these schools will also interview at the AFA). Most of the following observations are based on the FMA market. Here are a few themes I've seen or heard about from colleagues, job-seekers, or friends (either at Unknown University or at other schools).

1. Like in the econ market, there have been more canceled searches than usual. My sense is that between 5% and 10% of searches have been canceled due toi funding for the position getting yanked.
   
2. Probably as a reaction to #1, it seems like there are more schools this year who got their acts together and scheduled fly-outs early than in previous years. This makes sense, since there's a distinct possibility of a search being pulled as budgets deteriorate. So, the "smart" schools worked harder to bring out candidates and "seal the deal" while they still had funding (once a position is accepted the school almost never pulls the position). I know of several doctoral students (one here at Unseen University and two more at the Unseen Alma Mater) that had multiple flyouts by December 1.
   
3. Likewise, job candidates seem more risk-averse than in previous years and much more likely to accept early offers. Both "our" student and the two at my Alma Mater had accepted positions by mid-December.
4. Putting this all together, is seems like a larger than usual portion of the FMA market seems to have cleared by December.
   

I do see a couple of common characteristics for students who've done well at FMA. As far as scoring interviews goes, the most important factors seemed to be:

1. They have completed, polished working papers. If they're shooting for research schools, it's not that important how many they have, but it's critical that they are well polished and have the potential to be published in good journals (i.e. they ask an interesting question and have good results). If they're shooting more for balanced schools, the level of the potential publishing outlets isn't as important as at research schools. But here, numbers seem to help, too.
   
2. They have very strong good recommendations from their advisors. In addition, they typically had advisors (or other faculty) who "beat the bushes" for them - made phone calls, called in favors, etc...).
3. Credible evidence that they would be finished with their dissertations when they show up to teach next year. Schools are very leery of hiring someone for a tenure track position who will be wasting their first year finishing their dissertation. In effect, that person would have one less year to do the work necessary for tenure.
   

For those who got interviews, the next step was converting them into campus visits (no one ever got hired off a conference interview). Converting seemed higher for:

1. Candidates who had a good grasp of their topic: during the interview, they could not only discuss their dissertation in "academese", but also in plain language with good illustrations, analogies, and so on. In addition, when they were asked a question, they could answer it with good linkages to the literature in their field.
   
2. Candidates who were comfortable with the interview process. There's an old joke that an extroverted academic is one who looks at YOUR shoes when he talks to you. So, the bar isn't that high - it's not necessary to be the "life of the party". In fact, that would be a bad image to give out. But being able to talk comfortably with interviewers helps them to picture you as the guy in the next office over.
3. Those that could present a good reason why they were interviewing with the particular school. This often comes down to "I think I'd be a good fit with your faculty because you have Professors X, Y, and Z who work in this area", or "Your applied focus fits well with my industry experience in A, B, and C". After all, a school doesn't want to wast an interview on a candidate that they doubt would be interested in the school if offered a position.
   

These things might seem painfully obvious, but I was on the hiring committee that interviewed candidates at the 2007 FMA meeting. It was surprising how many candidates made obvious errors, had no clue how to write a cover letter, how to discuss their research, or knew almost nothing about Unknown University.

I got the sense that many of these students either hadn't been prepped well by their advisors, or simply hadn't listened to the advice they'd received. So have the faculty at your schools put you through the wringer before you go on the job market, and research your schools - it'll pay off.

Remember - you want to be like Stuart Smalley - good enough that you have a high probability of eventually getting tenure (i.e. they should see you as a capable researcher), smart enough to contribute to others' work (you should seem to be interested in others' research and good at commenting on it/working with others) and people should like you (after all, they might have you in the next office over for the next 20 years). Just remember that Smalley is a spoof and not a real person.

If any of my readers have other insights or observations about the FMA market, feel free to chime in.

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Three Collections of Advice About The Academic Finance Job Market

I recently came across two very good guides to the academic finance job market in a journal called Financial Decisions (formerly the Journal of Financial and Strategic Decisions).

The first one, titled "The Academic Job Market In Finance: A Rookie's Guide" is by Timothy Falcon Crack and Alex Butler. It's floated around the Internet for a while, and it's a pretty thorough guide to the job market for candidates at research-oriented schools. In addition to providing a lot of very helpful tips, it also lays out a timeline that would be useful for anyone just starting out graduate school - the choices you make in the first year or two are very important to your eventual job search.
note: they have a short update with a few additional pieces of advice here.

The second piece, by Delbert Goff and Stephen Huffman, is titled "The Finance Academic Job Search: What your Advisor Might Not Be Telling You". It's geared more towards the market for jobs at schools that are more teaching oriented. It has a very good list of questions to ask when you interview.

I wish I'd found these before FMA - they could have helped a few of the candidates we interviewed for our position.

Reflections on Interviewing at The FMA Meeting

Now that I've been back from the FMAs for about a week, I finally have time to put some thoughts together about the experience. Although I've been in the job candidate's seat a number of times, this was my first time being on the "hiring committee" side of the interviewing table, and it was an interesting experience, to say the least. Here are a few thoughts, in no particular order (like many of my thoughts, but let's not go there):

1. There was a huge (and noticeable) variation in the amount of preparation candidates had done on my school. If they didn't know anything about the school other than the location, it signalled a general lack of interest on their part (and resulted in a lack of interest on ours).
   
2. A surprising number of candidates did a very poor job of what I call "setting the table" for their research. By that, I mean the anecdotal part of showing me why I should give a rat's hiney about their topic. As an example, consider a candidate researching the effect of syndicate composition on the outcome of an IPO: A bad candidate would jump right into their model and/or hypotheses, while a good candidate might first talk about a recent underwriting syndicate put together by Goldman, and what some of the salient facts illustrated about their topic.
   
3. It's impressive when you can site literature to buttress your arguments and do it smoothly. It shows you have a good grasp on your literature. It's even better when you can bring it back to the big picture.
   
4. I found out that I really like asking questions about factors that the candidate hadn't considered in their tests (for example, if they were examining some aspect of merger bid premiums, I'd ask how the composition of the institutions (transient vs. indexers) holding target shares might affect their analysis). My main interest wouldn't be their specific answer, but rather how they approach the question. Again, if they can link it back to important prior research, all the better.
   
5. Here are some f the things that made candidates seem less attractive: not knowing their topic (or not caring) well enough to show me how it fits into things (see above), not taking care in answering questions (See above again), not at least making eye contact with everyone in the room (even if one is the dominant interviewer, we all count), and not having any good questions to ask US - it shows you're interested and know at least a bit about our institution. Make sure tehy're not dumb ones.
   
6. We had one or two candidates that were extremely sharp - they were prepared, articulate, passionate, interpersonally gifted, and had great dissertations that they really had a grasp of. Of course, we have NO chance of actually hiring these people (we're a bit under the market salary. But at least they serve as a benchmark.
7. The process can be stressful for the candidates, and stultifyingly boring for the interviewers. Regardless of which side of the table you're on, if you don't take careful notes, the interviews quickly run together.
   
8. One candidate had 35 interviews! I have no idea how they either prepared for all of them or how they survived the stress. On a related note, this candidate was 10 minutes late for OUR interview. So, they had probably gone past the optimal number. And we're not sure we want to get into a "multiple bidder" situation. So, thanks but no thanks.
9. We've met as a group since coming back, and have a short list of candidates we'd like to call for fly-outs. But before we can invite them, we have to clear the hurdle of our affirmative action office. And they're a picky and verrrry slow group. So, I suspect we'll get some sand thrown in the gears shortly, and we'll have to wait a while longer before the campus visits.
   
10. You run into a surprising number of candidates (and their professors) at the cocktail party and at the bar. This is a good place to find out if they're the sort of people you want as colleagues. (the well known "soft" information). If they can loosen up a bit (but not too much), it's a plus. Even better if they've been reading any interesting books lately.
    

I'll post more on the process as it continues. Stay tuned