Choice Of Advisor Research Articles

Preferences for advisor agreement and accuracy.

Previous research has shown that people are more influenced by advisors who are objectively more accurate, but also by advisors who tend to agree with their own initial opinions. The present experiments extend these ideas to consider people's choices of who they receive advice from-the process of source selection. Across a series of nine experiments, participants were first exposed to advisors who differed in objective accuracy, the likelihood of agreeing with the participants' judgments, or both, and then were given choice over who would advise them across a series of decisions. Participants saw these advisors in the context of perceptual decision and general knowledge tasks, sometimes with feedback provided and sometimes without. We found evidence that people can discern accurate from inaccurate advice even in the absence of feedback, but that without feedback they are biased to select advisors who tend to agree with them. When choosing between advisors who are accurate vs. likely to agree with them, participants overwhelmingly choose accurate advisors when feedback is available, but show wide individual differences in preference when feedback is absent. These findings extend previous studies of advice influence to characterise patterns of advisor choice, with implications for how people select information sources and learn accordingly.

“Should I stay or should I go?” Indicators of Dropping Out Thoughts of Doctoral Students in Computer Science.

Evidence in the literature indicates that doctoral candidates may experience increased levels of stress and worry about successfully completing their doctorate degrees. As a result, a significant number of doctoral candidates drop out. In our study with 424 doctoral students in computer science (113 women, 311 men), we ask about the frequency of dropout thoughts as an indicator of possible premature termination. By means of machine learning algorithms, we extract variables associated with higher or lower likelihood of dropout thoughts. In particular, satisfaction with advisor’s support, experiencing a crisis, professional self-efficacy, choice of advisor, and perceived meaningfulness of additional work tasks proved to be of central importance. Based on these results, we suggest taking steps to improve professional and social support for doctoral students. Recommendations include implementing more intensive supervision in the early stages of the doctorate, improve the match between doctoral candidates’ expectations and the requirements of the respective institute, monitor progress during the doctorate (e.g., with the help of an advisor agreement), and increase the qualifications of advisors to include leadership and communication skills.

Ending Bretton Woods: evidence from the Nixon tapes†

AbstractRichard Nixon's August 1971 announcement of a set of policies known collectively as the New Economic Policy (NEP), or the ‘Nixon shock’, effectively terminated the Bretton Woods system (BWS) of fixed exchange rates that had governed the international monetary system since 1944. While there are many accounts of Nixon's decision to end the BWS, the secret Nixon White House tapes provide unique insights into the decision‐making process and Nixon's struggle with this decision. Using the tapes as evidence, we find that Nixon resisted ending the BWS for political reasons and did not fully understand the NEP's strategy, particularly the fact that the domestic policies were designed to provide cover for the international policies. The tapes also clarify that the decision to adopt the NEP was made prior to the Camp David Summit of 13–15 August 1971 in response to general speculative pressure. While the US reacted to pressure on the dollar, Nixon and Treasury Secretary John Connally attempted to appear to be driving decisions for the domestic electorate. The temporary float of exchange rates as part of the NEP inevitably became permanent as a result of Nixon's choice of advisors and his preferences for open capital flows and stimulative monetary policy.

Financial advice and discretion limits

AbstractBiased recommendations from financial advisors often lead to suboptimal portfolios and unnecessary fees. In response, many households have moved to digital platforms, so‐called “robo‐advisors,” that provide low‐fee financial advice based on the household's observable characteristics. We model the advisor–client relationship and show that delegation with limits on the advisor's choice set (i.e., discretion limits) reduces the negative consequences of biased recommendations. Moreover, our analysis suggests that human advisors may play an important role in financial advice when they possess soft information about the client. The analysis suggests that a hybrid solution consisting of discretion limits (produced by a robo‐advisor‐like platform) and advisor choice may be optimal.

The financial advice puzzle: The role of consumer heterogeneity in the advisor choice

We investigate motivational drivers of financial advisor use, accounting for investor heterogeneity, with the goal of helping institutions increase the use of financial advisor services. The results from a latent class choice model reveal two distinct segments that differ in their approach to the financial advice decision. While higher levels of risk tolerance, trust, and self-efficacy increase financial advice use for both segments, albeit at much higher propensities for Segment 1, personality only matters for Segment 1. Moreover, their regulatory focus differs with Segment 1 being promotion and Segment 2 being prevention focused. Using these results, we offer suggestions for marketing strategies.

Advisor Selection, Advisor-Advisee Relationship, and Perceived Stress among Korean and US Doctoral Students

In recent decades a prolific amount of research has been conducted into the topic of students’ relationships with supervising professors as key to doctoral experiences and success. Across different education systems, positive relationships between doctoral students and their advisors have been strongly associated with socialization into their departments and disciplines, as well as overall satisfaction with doctoral programs. While faculty-student relationship has been widely studied as one of the most important factors affecting student satisfaction and attrition, little is known about how the choice of advisor and how advisor-student relationships are related to stress. Data was collected by administrating a survey of students enrolled in doctoral programs from a public, research-intensive university in the Midwest of the United States and a public, research-oriented institution in South Korea. The findings indicate that US students were generally more positive about the advisor-advisee relationship than Korean students and both Korean and US doctoral students’ concerns were largely related to post-graduation options.

Doctoral Students’ Perspectives on Their Advisors

ABSTRACTThe purpose of this article was to examine Kinesiology Doctoral Students’ (DS) perspectives on their advisors. Using the Kinesiology Doctoral Student (KDS) survey, 121 current and past DS provided information on 10 different aspects related to their advisors. Specifically, these items consisted of measures of DS perceptions on: (a) working with the advisor they wanted, (b) satisfaction with the process by which they came to have their advisors, (c) satisfaction with the amount and quality of time spent with advisor, (d) wanting to switch advisors but being unable to do so, (e) advisor’s reputation to get students through the process in a timely manner, (f) advisor had funding to support students, (g) advisor was recommended by other people, (h) advisor’s reputation as a good researcher, (i) advisor’s reputation as a good teacher, and (j) advisor’s ability to foster a positive work environment in research work groups. This topic was viewed through three lenses: (a) status (past and current DS), (b) gender, and (c) subdisciplines (social and behavioral sciences [SBS] research and health/hard sciences [HS] research). The following statistically significant findings were revealed: (a) past participants were significantly more satisfied with their advisor choice on this item (I wish I could have switched advisors but was unable to do so) compared to current participants and (b) past participants rated this item (had a reputation for being a good researcher) significantly higher than current participants. Open-ended comments spoke to the importance of selecting the “right advisor.”

Going for a PhD: Joys and Pitfalls

Going for a PhD: Joys and Pitfalls

Industry Expertise, Information Leakage and the Choice of M&A Advisors

AbstractThis paper examines the impacts of M&A advisors’ industry expertise on firms’ choice of advisors in mergers and acquisitions. We show that an investment bank's expertise in merger parties’ industries increases its likelihood of being chosen as an advisor, especially when the acquisition is more complex, and when a firm in M&A has less information about the merger counterparty. However, due to the concerns about information leakage to industry rivals through M&A advisors, acquirers are reluctant to share advisors with rival firms in the same industry, and they are more likely to switch to new advisors if their former advisors have advisory relationship with their industry rivals. In addition, we document that advisors with more industry expertise earn higher advisory fees and increase the likelihood of deal completion.

Does relationship matter? The choice of financial advisors

This study evaluates whether and how relationships influence acquirers’ choice of financial advisors in mergers and acquisitions (M&As). Specifically, it examines how acquirers’ relationships with their advisors, including their optimism of analyst recommendations and the outcome of their past services, determine the choice of advisors in current transaction. Findings suggest that banking relationships have significant yet limited influence on a firm's choice of M&A advisor. The evidence reveals that firms without recent M&A experience are more likely to choose their underwriters as financial advisors in stock-paid deals, especially when they provide overly optimistic analyst coverage prior to the transactions. Firms with recent M&A experience, however, are more likely to switch financial advisors with poor outcomes in past deal(s).

The value of “boutique” financial advisors in mergers and acquisitions

Between 1995 and 2006 about a quarter of merging firms hired boutique banks as their advisors on mergers and acquisitions (M&A). Boutique advisors, often specialized by industry, are generally smaller and more independent than full-service banks. This paper investigates firms' choice between boutique and full-service advisors and the impact of advisor choice on deal outcomes. We find that both acquirers and targets are more likely to choose boutique advisors in complex deals, suggesting that boutique advisors are chosen for their skill and expertise. After controlling for the endogenous choice of advisors, we find lower deal premiums when acquirers hire boutique advisors. In addition, boutique advisors spend more time, probably on due diligence and negotiation, to complete deals. Overall, our findings suggest that boutique advisors are chosen in more complex deals and they achieve more favorable deal outcomes.

Advisor Choice in Asia-Pacific Property Markets

This paper examines advisor choice decisions by publicly traded REITs and listed property companies in Asia-Pacific real estate markets. Using a sample of 168 firms, we find robust evidence that firms strategically evaluate and compare the increased agency costs associated with external advisement against the potential benefits associated with collocating decision rights with location specific soft information. Our empirical results reveal real estate companies tend to hire external advisors when they invest in countries: 1) that are more economically and politically unstable, 2) whose legal system is based on civil law, 3) where the level of corruption is perceived to be high, and 4) when disclosure is relatively poor. Additionally, we find the probability of retaining an external advisor is directly related to the expected agency costs. Lastly, we find evidence of return premiums in excess of 13 % for firms whose organizational structure matches their investment profile. As such, we conclude that the decision to hire an external advisor represents a value relevant trade-off between the costs and benefits of this organizational arrangement.

The Advising Investment Bank's Industry Expertise and Access to the Bidder's Private Information: Their Positive Influence on the Performance in Acquisition Sequences

This study extents the literature of the advising bank’s positive influence on the performance in mergers and acquisitions by modeling the expertise of banks on the industry level while considering two levels of endogeneity. The first level of endogeneity is caused by the most experienced banks being selected into the largest and most complex transactions with the lowest returns. The second level of endogeneity is caused by the observability of the influence of the bank’s industry expertise on the performance only when the acquirer decided to employ a bank as advisor and to choose that bank in particular. Along the acquisition sequence the bank that is most familiar with the acquirer and that has the highest industry expertise in the acquirer’s and target’s industries is most likely to be chosen as advisor. The choice of the advising investment bank based on its industry expertise and its access to the acquirer’s private information has a positive influence on the acquirer’s returns. In the analysis of the alternative advisor choice by endogenous switching the employment of a more experienced bulge-bracket bank would have resulted in higher returns in transactions advised by non-bulge-bracket banks or that are unadvised. The analysis shows that the matching of the most experienced banks with the largest and most frequent serial acquirers in the most complex transactions is efficient in terms of higher returns and a higher completion probability.

Prior Relationship, Industry Expertise, Information Leakage, and the Choice of M&A Advisor

This paper examines the impacts of M&A advisors’ industry expertise on firms’ choice of advisors in mergers and acquisitions. We show that an investment bank's expertise in merger parties’ industries increases its likelihood of being chosen as an advisor, especially when the acquisition is more complex, and when a firm in M&A has less information about the merger counterparty. However, due to the concerns about information leakage to industry rivals through M&A advisors, acquirers are reluctant to share advisors with rival firms in the same industry, and they are more likely to switch to new advisors if their former advisors have advisory relationship with their industry rivals. In addition, we document that advisors with more industry expertise earn higher advisory fees and increase the likelihood of deal completion.

Understanding the Doctoral Experience of Asian International Students in the Science, Technology, Engineering, and Mathematics (STEM) Fields: An Exploration of One Institutional Context

In this study, we explored the experience of Asian international doctoral students in the Science, Technology, Engineering, and Mathematics (STEM) fields at one research-extensive university. We found that Asian international doctoral students in the STEM fields at this institution were often isolated from their peers and faculty, faced an array of issues including the lack of funding, the choice of advisor, and other departmental issues distinct to their international student status. Implications for policy and practice are included.

Ties that blind? How strong ties affect small business owner-managers’ perceived trustworthiness of their advisors

This research investigates how a strong personal relationship (strong tie) between a small business owner-manager and his professional or informal advisor affects the relationship between the advisor's recent performance and the owner-manager's perceptions of the advisor's trustworthiness in terms of ability, benevolence and integrity. A negative moderating effect could point to a ‘tie that blinds’: the owner-manager may be less critical in evaluating the advisor's perceived trustworthiness in light of their recent performance, because of the existing personal relationship. A conceptual model is constructed and examined with survey data comprising 153 young Finnish businesses. The results show that strong ties increase the owner-manager's perception of the advisor's integrity, disregarding their recent performance. For professional advisors, strong ties reduce the impact of recent performance in the owner-manager's evaluation of their ability. For informal advisors, a strong tie makes it more likely that their benevolence will be evaluated highly in light of their recent performance. While the results show that ‘ties can blind’ under certain circumstances, the limitations of the study raise the need for further research to specify these contextual factors and examine the causal link between the choice of advisor and business performance.

A Theory on REIT’s Advisor Choice and the Optimal Compensation Mechanism

This paper proposes a model which examines the power of monitoring and forcing contract on improving managerial efficiency. We put particular focus on its implication regarding the choice of advisor type used by REITs. This question has long been a puzzling one in real estate literature. Our model provides a theoretical justification regarding the potential appeal of external managerial structure, which is usually regarded as being inferior to internal managerial structure. A crucial driving force regarding advisor choice is the heterogeneity on monitoring power between internal and external advisors and across REIT firms. Provided that the gap of monitoring power is large enough between internal and external advisors, shareholders could make use of the heterogeneity, and induce higher effort levels from external advisors. We motivate the rationale for expecting a “monitoring advantage” over external management from two aspects: the dual-role of external advisory firm and a bigger reputational cost associated with external advisor. Furthermore, we are able to specify the range within which an improved monitoring power is Pareto-optimal for both REIT shareholders and advisors. One implication is that, as agents, it may also be to the benefit of advisors to be better monitored. Finally, we compare the difference between fixed and stochastic forcing contracts. Our findings show that with their imperfect performance measures, the stochastic forcing contracts always dominate the fixed one.

Norms, status and the dynamics of advice networks: A case study

The issue of the influence of norms on behavior is as old as sociology itself. This paper explores the effect of normative homophily (i.e. “sharing the same normative choices”) on the evolution of the advice network among lay judges in a courthouse. Blau's (1955, 1964) social exchange theory suggests that members select advisors based on the status of the advisor. Additional research shows that members of an organization use similarities with others in ascribed, achieved or inherited characteristics, as well as other kinds of ties, to mitigate the potentially negative effects of this strong status rule. We elaborate and test these theories using data on advisor choice in the Commercial Court of Paris. We use a jurisprudential case about unfair competition (material and “moral” damages), a case that we submitted to all the judges of this court, to test the effect of normative homophily on the selection of advisors, controlling for status effects. Normative homophily is measured by the extent to which two judges are equally “punitive” in awarding damages to plaintiffs. Statistical analyses combine longitudinal advice network data collected among the judges with their normative dispositions. Contrary to what could be expected from conventional sociological theories, we find no pure effect of normative homophily on the choice of advisors. In this case, therefore, sharing the same norms and values does not have, by itself, a mitigating effect and does not contribute to the evolution of the network. We argue that status effects, conformity and alignments on positions of opinion leaders in controversies still provide the best insights into the relationship between norms, structure and behavior.

The Value of 'Boutique' Financial Advisors in Mergers and Acquisitions

Over the period of 1995-2006, about 19% of acquirers and 25% of targets hire boutique banks as their M&A advisors. The expertise of boutique advisors in M&A advisory services may identify them as niche players in the industry. This paper is the first to investigate how merging firms choose between boutique and full service advisors and how this choice affects deal outcomes in M&A transactions. Firms are more likely to choose boutique advisors when facing a deal with greater complexity. After controlling for the endogenous choice of advisors by merging firms, we find that the deal premium paid in mergers is lower if boutique advisors are used on the acquirer side, indicating that acquirers’ shareholders benefit from the expertise of boutique advisors. On the other hand, we do not find that boutique advisors charge higher advisors fees, suggesting that boutique players are pressured by fierce competition from full service banks for market share.

Thinking About Going Abroad: The Choice of Advisor in Cross-Border M&A Deals

The selection of a financial advisor by acquirers is an important determinant of the value created in cross-border deals, if acquirers need the experience and skills of their advisors to navigate the foreign, economic and regulatory practices and conditions. We therefore model the decision to hire an advisor - including the choice of advisor nationality and experience - and empirically examine 3,537 cross-border transactions across 92 target and 46 acquirer nations between 1995 and 2005. We find that both target and acquirer nation characteristics, such as formalism, financial sophistication, investor protection, and openness to foreign acquisitions, influence the acquirer's choice of advisor nationality. Global and target country experience of an advisor serves as a substitute for the acquirer's own cross-border acquisition experience, but advisors from either the target or acquirer country - even when less experienced - create most value.