Winter 2009

In Brief

Leland Receives $100,000 Financial Economics Prize


Finance Professor Hayne Leland won the first-ever Stephen A. Ross Prize from the Foundation for the Advancement of Research in Financial Economics for his research in corporate debt pricing and capital structure.

Leland won the award for his 1994 Journal of Finance paper “Corporate Debt Value, Bond Covenants, and Optimal Capital Structure.” The paper analyzed how firms determine the optimal mix of debt and equity to acquire funding at the lowest cost, balancing tax advantages with potential default costs.

Leland’s paper was among more than 350 articles considered by the foundation, a global consortium of finance academics and practitioners. The foundation created the $100,000 biennial award last year to recognize and encourage research in financial economics — a field that explains the underpinnings of corporate finance and capital markets.

“Just as mathematics has the Fields Medal, finance research now has the Ross Prize to recognize the pioneering discoveries in financial economics,” says Haas School Dean Rich Lyons, also a finance professor. “I couldn’t think of a more deserving individual to be honored with the first Ross Prize than my colleague Professor Hayne Leland.”

Leland, a professor at the Haas School since 1974, also examined the determinants of debt value and default in his seminal article. Subsequent research has built on his analysis and insights to examine how firms adjust the mix of debt and equity over time and how this affects pricing in financial markets.


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Hayne Leland


Professor Hayne Leland won the $100,000 Stephen A. Ross prize for his work in financial economics.