eFinancialCareers

MBAs who graduate in a bear market are less likely to go into investment banking, money management and venture capital than those who graduate in a bull market, according to research conducted by Paul Oyer, associate professor of economics at Stanford's Graduate School of Business.

For example, more than a quarter (26 percent) of Stanford MBAs who graduated two years before the stock market crash of 1987 became investment bankers. But just 17 percent of the graduates two years after the crash took that career path.

Based on the long-term career choices and salaries of more than 35 years’ of Stanford graduates, Oyer calculates those hired into lucrative investment banking positions have lifetime earning of $2 million to $6 million more than their classmates who work outside banking. "It always struck me that being in the right place at the right time was important in career paths," he says.

Oyer also discovered MBAs who remain in investment banking for more than five years tend to stay in the business long term. While 5 to 10 percent of MBAs leave investment banking within four years of graduation, the percentage typically doesn't change significantly after that point.

Oyer was surprised at the lack of industry job-hopping by graduates. "The idea has long been that MBAs change jobs all the time. But what this study shows is that they are not jumping in and out of investment banking. It's pretty sticky. Once you're there you tend to stay. Once you've started down another path, you're not likely to move to a Wall Street firm."

The study bears out the notion that general economic factors of the graduation year will have profound long-term implications on an MBA's careers. "Every year our students get very anxious about the state of the job market. I always thought we - because I was the same way when I was finishing school - were being silly," says Oyer. "But as it turns out, we had pretty good reasons to be worried about the state of the job market, as it would affect a lot of us for a long time to come."