Why Do We Tenure? Analysis of a Long Standing Risk-Based Explanation

35 Pages Posted: 23 May 2016 Last revised: 20 Oct 2016

Jonathan Brogaard

University of Washington - Department of Finance and Business Economics

Joseph Engelberg

University of California, San Diego (UCSD) - Rady School of Management

Edward Dickersin Van Wesep

University of Colorado at Boulder - Department of Finance

Date Written: May 18, 2016

Abstract

Using a sample of all academics that pass through top 50 economics and finance departments between 1996 and 2014, we study whether the granting of tenure leads faculty to pursue riskier ideas. We use the extreme tails of ex-post citations as our measure of risk and find that both the number of publications and the portion that are “home runs” peak at tenure and fall steadily for a decade thereafter. Similar patterns holds for elite (top 10) institutions, for faculty with longer tenure cycles, and for promotion to Full Professorship. We find the opposite pattern among poorly-cited publications: their numbers steadily rise after tenure. The decline in both the quantity and quality of publications points to tenure incentivizing less effort in publishing rather than more risk-taking.

Keywords: Tenure, Incentives, Contracting, Compensation, Publication

JEL Classification: J24, J33, J44, M12, M52

Suggested Citation

Brogaard, Jonathan and Engelberg, Joseph and Van Wesep, Edward Dickersin, Why Do We Tenure? Analysis of a Long Standing Risk-Based Explanation (May 18, 2016). 2nd Annual Financial Institutions, Regulation and Corporate Governance Conference. Available at SSRN: https://ssrn.com/abstract=2781693

Jonathan Brogaard

University of Washington - Department of Finance and Business Economics ( email )

Box 353226
Seattle, WA 98195
United States

Joseph Engelberg

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Edward Dickersin Van Wesep (Contact Author)

University of Colorado at Boulder - Department of Finance ( email )

Campus Box 419
Boulder, CO 80309
United States

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