Financial Decisions - Document Index

A Better Predictor of Graduate Student Performance in Finance:

Is it GPA or GMAT?

Stephen F. Borde

University of Central Florida

Abstract

This study explores the relative importance of two widely used predictors of students’ academic performance in graduate business programs, GMAT scores and undergraduate GPAs. Results from previous studies have been mixed with respect to overall performance in graduate business programs, but their relative importance as predictors of performance in finance has received little attention in the literature. The results of this study seem to indicate that undergraduate GPAs might be better predictors of overall performance in graduate business programs, and GMAT scores may be better predictors of performance in finance. These findings could have implications for the establishment of appropriate admissions criteria, remedial and prerequisite requirements for particular students, and provide guidance for finance instructors at the graduate level.

JEL Classification: A2, G0, G3, M1

Keywords: finance, financial education, GMAT, GPA