Press Release Announcing the Fifth Ross Prize

Foundation for Advancement of Research in Financial Economics Awards Fifth $100,000 Academic Prize

Finance Scholars Jonathan Berk and the late Richard Green

The Stephen A. Ross Prize in Financial Economics has been awarded to Mutual Fund Flows and Performance in Rational Markets, Journal of Political Economy 112 (2004), 1269-1295 by Professor Jonathan Berk of Stanford University and the late Professor Richard Green of Carnegie Mellon University

The prize committee chose this paper for its important contribution to our understanding of the equilibrium behavior of mutual fund returns and mutual fund flows. The Berk and Green article has reoriented the questions asked in mutual fund studies. As shown by Berk and Green, in an efficient market for mutual funds we should observe that: (i) actively-managed funds do not outperform passive benchmarks; (ii) investors reallocate their money to the better performing funds; and (iii) there is no persistence in mutual fund performance. Previously it was deemed puzzling that researchers found evidence consistent with (i), (ii) and (iii). Now it seems puzzling when researchers find evidence that contradicts these three predictions. The full award citation is available at the following link.

The prize committee members were Ravi Bansal, Mike Fishman (chairman), Wei Jiang, Arvind Krishnamurthy, Hayne Leland, Scott Richard, and Pietro Veronesi.

The FARFE conference will be held on October 21, 2017 where participants can celebrate the prize and discuss related and other issues. The conference will have similar format and location as previous conferences, at Endicott house, with most events taking place through the day Saturday, October 21. Some of the afternoon panels are expected to be linked to and commemorate Steve’s work. MIT will hold a conference in honor of Steve on October 20th at the Sloan school.

Founded in 2006 by finance academics and practitioners, FARFE is committed to supporting research in financial economics and to facilitating productive interaction between research and practice in finance. For more details about FARFE, the Ross Prize, and the award-winning paper, see


Past Winners

2014 Prize: To "Transform Analysis and Asset Pricing for Affine Jump-Diffusions" by Darrell Duffie, Jun Pan and Kenneth Singleton.

2012 Prize: To “Private and Public Supply of Liquidity,” by Bengt Holmstrom and Jean Tirole.

2010 Prize: To "Credit Cycles," by Nobuhiro Kiyotaki and John Moore.

2008 Prize: To "Corporate Debt Value, Bond Covenants, and Optimal Capital Structure," by Hayne Leland.

The Stephen A. Ross Prize in Financial Economics

The initiative to establish FARFE came from academics and practitioners who were former students of Stephen A. Ross. To encourage research that exemplifies his focus on fundamental research, and to celebrate the influence he has had on financial economics and on the lives of his students, FARFE has established the Stephen A. Ross Prize in Financial Economics. This biennial award of $100,000 honors a paper in financial economics selected from all papers published over the prior 15 years in any finance or economics outlet. The winning paper must either develop or test a theory in financial economics. The inaugural prize was awarded in 2008 to Hayne Leland for his 1994 Journal of Finance paper "Corporate Debt Value, Bond Covenants, and Optimal Capital Structure."   About Stephen A. Ross
History of the Stephen A. Ross Prize