Alex Edmans

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Alex Edmans FAcSS is a British academic and economist who is professor of finance at London Business School [1] and Mercers' School Memorial Emeritus Professor of Business at Gresham College. [2] He serves on the World Economic Forum Global Future Council on the Future of Responsible Investing [3] and as a non-executive director of the Investor Forum. [4] He is an elected Fellow of the Academy of Social Sciences [5] and the Financial Management Association, [6] Director of the American Finance Association and Vice President-Elect of the Western Finance Association.

Contents

In 2021, Edmans was named Professor of the Year by Poets&Quants. [7] From 2017 to 2022 he served as managing editor of the Review of Finance , increasing its impact factor from below 2 to above 5. [8]

Edmans' book on the business case for purpose, Grow the Pie: How Great Companies Deliver Both Purpose and Profit, was named to the Financial Times best books of 2020. [9] He is co-author of Principles of Corporate Finance, the leading corporate finance textbook (with Richard Brealey, Stewart Myers, and Franklin Allen) from the 14th edition. He gave the TED talk What to Trust in a Post-Truth World, on confirmation bias and the importance of being discerning with evidence, which has 2 million views.

Education and early career

Edmans studied at St. Paul's School, London and then received a BA in Economics and Management from Merton College, Oxford. After two years at Morgan Stanley, he earned a PhD in Financial Economics from MIT Sloan School of Management as a Fulbright scholar. [10] His first academic position was at Wharton School of the University of Pennsylvania. He was awarded tenure in 2013 and then moved to London Business School as a full professor of finance.

Research

Edmans' research is on corporate governance, executive pay, the real effects of financial markets, and behavioral finance, and has been cited 16,500 times. His work covers topics such as the role of blockholders (large shareholders) in disciplining management, [11] the importance of long horizons in executive pay, [12] [13] how managers learn from financial markets to guide their real decisions, [14] [15] [16] and the effect of sentiment on the stock market. [17] [18]

Responsible business

Edmans’ main strand of research is on the business case for responsible business, demonstrating that responsibility can create financial as well as social value. His papers in the Journal of Financial Economics [19] and Academy of Management Perspectives [20] show that companies with high employee satisfaction, as measured by their inclusion in the 100 Best Companies to Work For in America, delivered shareholder returns that beat their peers by 2.3-3.8% per year over a 28-year period. His book, Grow the Pie, argues that investing in stakeholders does not split the pie at the expense of shareholders, but grows the pie for the ultimate benefit of shareholders.

His most recent work highlights the trade-offs and complexities involved in responsible business. He finds that demographic diversity statistics bear little relation to diversity, equity, and inclusion, [21] and that the high returns to carbon-emitting stocks arise due to higher profits rather than greater risk. [22] His paper The End of ESG called for the ESG term to be scrapped on the grounds that environmental, social, and governance issues are relevant to all practitioners, not just ESG practitioners. It argues that ESG is "extremely important and nothing special", the former because it is critical to long-term value and the latter because it should not be seen as superior to other drivers of long-term value. [23]

Books

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References

  1. ↑ "Alex Edmans". London Business School. Retrieved 8 November 2020.
  2. ↑ "Professor Alex Edmans". www.gresham.ac.uk. Retrieved 8 November 2020.
  3. ↑ "Global Future Council on the Future of Responsible Investing". World Economic Forum. Retrieved 22 October 2023.
  4. ↑ "Who We Are". Investor Forum. Retrieved 22 October 2023.
  5. ↑ "Fellows". Academy of Social Sciences. Retrieved 22 October 2023.
  6. ↑ "FMA Fellows Program". Investor Forum. Retrieved 22 October 2023.
  7. ↑ "Poets & Quants' Professor Of The Year: London Business School's Alex Edmans". Poets & Quants. Retrieved 13 March 2022.
  8. ↑ "2022 Managing Editor's Report" (PDF). Review of Finance. Retrieved 22 October 2023.
  9. ↑ "Best books of 2020: Business". Financial Times. Retrieved 22 October 2023.
  10. ↑ "Alex Edmans CV" (PDF). Alex Edmans. Retrieved 30 August 2021.
  11. ↑ Edmans, Alex (2009). Blockholder trading, market efficiency, and managerial myopia. Journal of Finance 64, 2481-2513.
  12. ↑ Edmans, Alex, Xavier Gabaix, Tomasz Sadzik, and Yuliy Sannikov (2012). Dynamic CEO compensation. Journal of Finance 67, 1603-1647.
  13. ↑ Edmans, Alex, Vivian Fang, and Katharina Lewellen (2017). Equity vesting and investment. Review of Financial Studies 30, 2229-2271
  14. ↑ Edmans, Alex, Wei Jiang, and Itay Goldstein (2012). The Real Effects of Financial Markets: The Impact of Prices on Takeovers. Journal of Finance 67, 933-971.
  15. ↑ Edmans, Alex, Wei Jiang, and Itay Goldstein (2012). Feedback Effects, Asymmetric Trading, and the Limits to Arbitrage. American Economic Review 105, 3766-3797.
  16. ↑ Edmans, Alex, Sudarshan Jayaraman, and Jan Schneemeier (2017). The Source of Information in Prices and Investment-Price Sensitivity. Journal of Financial Economics 126, 74-96.
  17. ↑ Edmans, Alex, Diego Garcia and Oyvind Norli (2007). Sports sentiment and stock returns. Journal of Finance 62, 1967-1998.
  18. ↑ Edmans, Alex, Adrian Fernandez-Perez, Alexandre Garel and Ivan Indriawan (2021). Music sentiment and stock returns around the world. Journal of Financial Economics.
  19. ↑ Edmans, Alex (2011). Does the stock market fully value intangibles? Employee satisfaction and equity prices. Journal of Financial Economics 101, 621-640.
  20. ↑ Edmans, Alex (2012). The link between job satisfaction and firm value, with implications for corporate social responsibility. Academy of Management Perspectives 26, 1-19.
  21. ↑ Edmans, Alex, Caroline Flammer and Simon Glossner (2023). Diversity, equity, and inclusion.
  22. ↑ Altigan, Yigit, K. Ozgur Demirtas, Alex Edmans, and A. Doruk Gunaydin (2023). Does the carbon premium reflect risk or mispricing?
  23. ↑ Edmans, Alex (2023). The end of ESG. Financial Management 52, 3-17.
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