Preparation for the real business world: empirical research in the MBA finance curriculum

The majority of MBA students receive little exposure to formal empirical research even though research and development spending at corporations around the world continues to increase. We believe that in order to be successful managers, MBA graduates need to understand the empirical research process as well as the intricacies of finance, such as the risk/return relationship and the factors that affect firm profitability. The project described in this paper addresses these issues by exposing students to the empirical research process in a structured, organized manner. The goal is to immerse the students in the research process, providing them with the tools they need to achieve success and encouraging them to learn from each other as they develop an empirical research article that includes a literature review, testable hypotheses, and a discussion of methodology as well as sections describing findings, conclusions and recommendations for further research. This project enables students to discover how the theories of finance are employed in real businesses; incorporating this project into the MBA curriculum helps enrich the students' graduate experience and combats the lack of research at the MBA level.

INTRODUCTION

The rapid evolution of technology has dramatically impacted the field of finance, and it is imperative that business students, especially graduate students, be exposed to information technology during their course of study at their school of choice. Information available from the capital markets, the World Wide Web (WWW), and the Internet has become an essential part of many financial decision processes including deciding on a capital expenditure project, investigating potential funding sources, or investing personal or corporate resources. The majority of all MBA students no longer have to write a thesis; therefore, they are not exposed to formal empirical research. At the same time, research and development at corporations around the world comprises a large portion of the world economy. In this R&D environment, future managers need to understand the process associated with empirical research, and they need to know how to interpret published research.

In order to be successful managers, MBA graduates must understand the intricacies of finance including the risk/return relationship and the factors that affect firm profitability. The empirical research project described in this paper enables MBA students to study a critically important finance topic from a hands-on perspective using peer-reviewed articles and real-world data. To simulate the actual work environment prevalent in the business world today, the students work in teams to select a topic of their choice, develop a literature review using scholarly articles, formulate hypotheses, collect and analyze data, and write-up their methodology and findings.

A positive experience with empirical research, whether it is at the graduate or undergraduate level, will help students to discover the joy in knowledge discovery. The purpose of the project developed in this paper is to expose students to the process of empirical research in a structured, organized manner. The goal is to immerse the students in the research process, providing them with the tools they need to achieve success and encouraging them to learn from each other. Ultimately, we hope that the research project will help the students develop a desire to continue to seek out and create knowledge. Students may forget the facts and figure that they learn during their post-secondary education, but, hopefully, if they realize how much fun knowledge discovery can be, they will take a love of life long learning with them when they leave campus.

THE EMPIRICAL RESEARCH PARADIGM

Although the literature on the inclusion of empirical research projects in the graduate business curriculum is rather sparse, there has been research done on the topic in other disciplines. A review of the literature, including topics such as the pedagogical value of student research, graduate student preparedness for empirical research, and group dynamics, supports the incorporation of an empirical research project into a graduate level finance class.

Graduate Student Readiness

Murry, McKee and Hammons [1997] contend that little academic research has been done on the information gathering capabilities of graduate students. Instead, most relevant research on bibliographic instruction has been focused on undergraduate students. The University of South Dakota's Masters of Business Administration (MBA) program requires an empirical research project for the Financial Administration course that all MBA students must take. With regard to proficiency with research methodologies or information retrieval techniques, the USD student population appears to encounter problems similar to those that Murry, et. al. [1997] describe for their University of Arkansas doctoral students enrolled in the "Higher Education" program. In both groups, students typically have little exposure to the specialized database resources in their respective fields. Murry et. al. [1997] argue that these are essential skills for students to develop, particularly if they aspire to leadership roles in which they must be proficient at "locating" pertinent information to solve "real world" problems.