In a remarkable streak, Carroll School faculty have walked off with six of these prestigious awards in the past six years
For the second year in a row, two of the most coveted awards in academic finance have gone to Carroll School of Management faculty. Two assistant professors of finance were among just six recipients of the prestigious awards for research given this year by the American Finance Association.
Over the past six years, the Carroll School has racked up six of these prizes. That is a rare streak: Ever since the awards were instituted in 1989, only five universities have walked off with as many of them in as many years, according to an analysis of the finance association’s compilation of past winners. Those would be Harvard, MIT, University of Chicago, New York University—and now, Boston College.
The association publishes The Journal of Finance—considered the preeminent peer-reviewed publication in its field—and grants awards for papers published in that journal during the previous year. Award winners are announced at the association’s annual meeting, held virtually this year in early January.
The two Carroll School professors who continued the streak are Simcha Barkai and Rawley Heimer. Barkai took the top spot among three scholars awarded the Dimensional Fund Advisors Prize, given to papers in the category of non-corporate finance. The prize went for his October 2020 article, “Declining Labor and Capital Shares,” which he authored solo—arguing that diminished competition among U.S. firms since the 1980s is the primary cause for a decline in workers’ wages during that time. In many industries, a handful of companies harbor nearly all of the economic power, enabling them to cut labor costs even as their workers’ productivity has increased—and pass more and more of their profits along to shareholders instead, Barkai found.
The Dimensional Fund Advisors Prize recognizes one “Best Paper,” given this year to Barkai, and two “Distinguished Papers.” Heimer and his coauthors took home the latter honor for “YOLO: Mortality Beliefs and Household Finance Puzzles,” which reveals a surprising connection between a person’s age and propensity to save. Young people, Heimer found, falsely overestimated their risk of dying from a rare event like a car accident or animal attack and under-saved by 26 percent, while older people, expecting to live longer than actuarial data suggests, resisted dipping into their savings.
Best-paper winners of the Dimensional Fund Advisors Prize receive a cash award of $25,000. Distinguished papers net $10,000 each.
“It is remarkable for two scholars from the same school to receive the awards in a single year,” said Ronnie Sadka, who serves as chair of the Finance Department in addition to being the inaugural holder of the Haub Family Professorship and senior associate dean of faculty at the Carroll School. “To achieve that in two consecutive years, though, that is incredible.”
Sadka was referring to three Carroll School professors who received very similar awards at the American Finance Association’s conference last year. Barkai follows in the footsteps of David Solomon, associate professor of finance and David J. Mastrocola Faculty Fellow, who received the same first-place Dimensional Fund Advisors Prize for his 2019 paper, “The Dividend Disconnect.” And two (now-former) associate professors in the department, Andrey Malenko and Nadya Malenko, received a Distinguished Paper award in the other category, corporate finance, for an article they published jointly.
Six Years, Six Prizes
Sadka also pointed to Jeffrey Pontiff, professor and James F. Cleary Chair in Finance, who won the first-place Dimensional Fund Advisors Prize (then called the Amundi Smith Breeden Prize) in 2016. Pontiff’s winning paper remains atop The Journal of Finance’s list of most cited articles five years after its publication. In addition, Vyacheslav (Slava) Fos, an associate professor and Hillenbrand Family Faculty Fellow in the Finance Department, won a Distinguished Paper award in 2015, also in non-corporate finance.
“That’s six of these top finance awards, in six years. There’s no other school that’s had a better streak than that, other than the University of Chicago,” Sadka noted, pointing to the five schools of management (now including the Carroll School) that have accomplished the feat any time since the American Finance Association began handing out the awards 32 years ago.
During the past six years, only New York University’s Stern School of Business has performed as well as the Carroll School (with six prizes). Altogether, only four business schools—at Stanford, Columbia, NYU, and Boston College—have taken as many as four of the prizes during these six years. “All of that demonstrates the results we’ve been able to achieve in our department through a multi-year effort by the faculty, with constant support from our dean, provost, and president, as well as our generous alumni,” Sadka said.
The stream of honors from the American Finance Association and its leading journal are not the only markers of a finance program continuing its rise. The department hit an all-time high earlier this year with its #7 ranking in U.S. News & World Report’s “Best Undergraduate Finance Programs” of 2021.
“Our Finance Department and its achievements go to the heart of what we’ve been doing at the Carroll School to advance our research mission,” said John and Linda Powers Family Dean Andy Boynton. “We’ve built a community of first-rate scholars who generate original scholarship and contribute meaningfully to their disciplines and the practice of management,” Boynton explained. “And we’ve done that all through our culture—encouraging faculty to share their research and engage in the kind of dialogue that generates new ideas and gives energy and enthusiasm to the work.”
Heimer echoed Boynton’s sentiment in an email to colleagues about his award. Thanking his department for their valuable feedback on revisions and the additional funding he received for final-stage research, Heimer wrote, “An environment like ours is essential to being able to execute papers that are both exhaustive and exhausting!”
— Carroll School News