[Excerpt] This paper examines the widely popular Business Week and U.S. News &World Report rankings of the top business schools to determine their impact on the admissions outcomes, pricing policies, and career placement outcomes of the business schools they rank. The analysis indicates that both ranking systems have a significant impact on students and administrators in the short term and long term, but employers are only impacted by long-term changes in ranking. While both ranking systems are shown to have significant effects, some evidence indicates that Business Week’s ranking is slightly more influential with students and significantly more influential with recruiters.
In general, a fall in either ranking system leads a school to become less selective because its applicant pool shrinks and declines in quality, and a smaller percentage of applicants who are accepted matriculate. In addition, administrators are forced to either cut tuition or increase grant and scholarship aid to attract more students from its declining applicant pool. A more favorable ranking allows a school to become more selective as it attracts higher quality students who are more eager to attend the university, and the school can then decrease its grant and scholarship aid or slightly raise its tuition.
Employers do not respond to yearly changes in rank, but a prolonged change in a school’s ranking by either system leads employers to change their behavior. A long-term increase in a program’s ranking leads to more of its students obtaining job offers, higher salaries for these offers, and more offers per student, in addition to an overall increase in the value of the MBA (as measured by change in salary). Similarly, a program which encounters a long-term decline in rank will see fewer of its students obtain lower-paying jobs, fewer options for each student, and a devaluing of the program’s MBA.