Academic journal article Journal of the Academy of Business Education

An Empirical Analysis of Success Factors in an Introductory Financial Management Class

Academic journal article Journal of the Academy of Business Education

An Empirical Analysis of Success Factors in an Introductory Financial Management Class

Article excerpt

INTRODUCTION

Numerous studies have examined the factors that affect academic grades in various settings and disciplines. Along with the work of Harris [1940] discussed in the abstract, Munday [1970] studies 134 colleges and universities in 1964 and 1965 to determine the factors that predict college grades. He studies variables such as ACT, class size, gender, and high school grade point average (GPA). In a more recent article, Robbins et al. [2004] study the impact of psychosocial and study skill factors on predicting college grades. Their study, a meta-analysis of 109 previous studies, reveals that the two strongest predictors of GPA are academic self-efficacy and achievement motivation. (See also Lynch [2006]).

While results from these types of studies are neither completely consistent nor conclusive, there are several common factors studied in the existing research such as GPA, ACT/SAT scores, demographic variables, weekly hours studied for class, and weekly hours worked by students. These common factors warrant additional research. In addition, we extend the existing literature along two main directions. First, we test factors that explain student performance in a recent introductory financial management class. Second, we expand the explanatory variable set by a considerable number of potential factors to explain student grade performance.

The extent literature, summarized below, contains previous attempts to determine what factors influence student grades in various academic disciplines. The closest disciplines to finance studied in business are accounting and economics; however, we lever the literature by applying it to financial management. This extension seems plausible. For example, in economics, Krohn and O'Connor [2005] show that the number of hours studied for a class is negatively correlated with success in that class-a counterintuitive finding. However, this perhaps intriguing result is also found in several studies across multiple disciplines including accounting and finance [Uyar and Gungormus, 2011; Trine and Schellenger, 1999]. Lagging economics and accounting, the literature about performance in a financial management class is far from conclusive and leaves much to study. We attempt to fill part of this void with our paper.

The next section provides a review of the literature, specifically to motivate the factors and variables explored in the subsequent sections. We search all areas of academic literature, not limiting our search to finance or business journals. We then present the data and methods to include the factor groups used in the multivariate tests. The data section is followed by the empirical results section, which highlights the key findings in univariate and multivariate tests. The final section discusses implications for practice and concludes.

LITERATURE REVIEW

For purposes of our study we have grouped many of the individual variables into factor groups. We construct factors to capture multiple dimensions within a single construct. For example, the Intelligence Factor is composed of ACT/SAT scores, High School GPA, College GPA, and whether or not the student was on an Academic Scholarship at the university when he or she took the questionnaire. By including multiple dimensions in one factor, we are able to test for significance of a factor that may not be completely measured by an individual survey question. Each of the following sections contains a description of the individual variables that compose the factor groups and the theoretical underpinnings for each factor from the extant literature.

Intelligence

As described above, the Intelligence factor is composed of ACT/SAT scores, High School GPA, College GPA, and whether or not the student was on an Academic Scholarship when he or she took the questionnaire. ACT/ SAT scores and college GPA have been used as predictors in earlier studies. Generally, ACT/SAT scores are accurate predictors of success in college courses [e. …

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