Do MBAs Pick Winning Stocks When Choosing Their First Job?

Every summer and fall, freshly minted MBAs and MBA summer interns take new positions at companies. We analyze whether their choices have any predictive power on the success of those companies. We show that MBAs tend to join companies that have been successful in the time leading up to the beginning of employment. These companies’ stock, on average, continues to substantially outperform the broader market in the year after new MBAs join. Most, if not all, of this outperformance after hiring can be explained by the fact that the employers tend to be high beta, or higher risk, firms. Adjusting returns for a factor model, we still find that excess returns are higher in the year leading up to the start of employment. Excess returns are mean reverting in the following year and are much smaller. We go on to show that the relationship between MBA hiring and stock returns is similar to that for other non-executive employee hires but very different from CEOs.