Stephen A. Ross
The Prize Winner 2015
Stephen A. Ross, the Franco Modigliani Professor of Financial Economics and a Professor of Finance at the MIT Sloan School of Management, passed away suddenly on March 3, 2017.
He was previously the Sterling Professor of Economics and Finance at Yale University for 13 years and a Professor for Economics and Finance at the Wharton School of the University of Pennsylvania from 1975 to 1977. Ross is a fellow of the Econometric Society and a member of the American Academy of Arts and Sciences, serving as an associate editor of several economics and finance journals. In 1988, he was president of the American Finance Association. Stephen A. Ross is the author of more than 100 peer-reviewed articles in economics and finance and co-author of the best-selling textbook Corporate Finance. Furthermore, he has further acted as advisor to the financial sector, major corporations, and government departments such as the U.S. Treasury, the Commerce Department, the Internal Revenue Service, and the Export-Import Bank of the United States. He holds a PhD in Economics from Harvard University.
An outstanding scientist with the ability to make complex theories tangible for broad audiences
Stephen A. Ross’ wide range of research interests include the economics of uncertainty, corporate finance, decision theory, and financial econometrics. He is known for his fundamental contribution to modern financial economics. His models have changed and advanced practice profoundly. They are widely applied and standard in academia and the financial industry.
Most notably, Stephen A. Ross is the inventor of the Arbitrage Pricing Theory, a cornerstone of modern asset pricing theory and the Theory of Agency, which is omnipresent not just in corporate finance but also in many other spheres of economics. Furthermore, he is the co-creator of Risk-Neutral Pricing and of the Binomial Model for Pricing Derivatives. His work has been central for the development and the empirical analysis of the term structure models. He co-authored the Econometrica paper A Theory of the Term Structure of Interest Rates in 1985, which remains one of the most crucial contributions on the topic to this date.
In addition, recently Ross’ Recovery Theory has opened up a huge potential for the analysis of household subjective expectations, rationality and financial literacy, but also financial advice. His theories provide standards for pricing in major securities trading firms, useful for retirement accounts and for new financial products that may allow households to insure a wider range of risks.