Faculty & Research

Stephen Ross

Franco Modigliani Professor of Financial Economics
Professor of Finance

Biography | Publications

Stephen A. Ross is the Franco Modigliani Professor of Financial Economics at MIT and Chairman of Compensation Valuation, Inc.(CVI) and Principal and CIO of Ross Institutional Investors, LLC (RII). He was previously the Sterling Professor of Economics and Finance at Yale University and, before that, a professor of economics and finance at the Wharton School of the University of Pennsylvania.

Professor Ross is the author of more than 100 articles in economics and finance and is the coauthor of an introductory textbook in finance. He received his B.S. with honors from CalTech in 1965 where he majored in physics, and his Ph.D. in economics from Harvard in 1970. While he has worked on a variety of topics in economics and finance, he is probably best known for having invented the Arbitrage Pricing Theory and the Theory of Agency, and as the co discoverer of risk neutral pricing and of the binomial model for pricing derivatives. Models developed by him and coworkers, including term structure models and option pricing models, are now standards for pricing in major securities trading firms. He has been the recipient of numerous prizes and awards including the Graham and Dodd Award for financial writing, the Pomerance Prize for excellence in the area of options research, the University of Chicago's Leo Melamed Prize for the best research by a business school professor and the 1996 IAFE Financial Engineer of the Year Award. In 2006 he was the first recipient of the CME-MSRI Prize in Innovative Quantitative Application and in 2007 he won the Jean-Jacques Laffont Prize given by the Toulouse School of Economics. A Fellow of the Econometric Society and a member of the American Academy of Arts and Sciences, he currently serves as an Associate Editor of several economics and finance journals and in 1988 was President of the American Finance Association.

CVI specializes in the valuation of complex option contracts and is currently a leading provider of valuation services for determining the expensing of employee stock options. RII manages portfolios of funds of alternative investments. Ross has been a consultant to a number of investment banks as well as many major corporations. In addition, he has served as an advisor to government departments such as the U.S. Treasury, the Commerce Department, the Internal Revenue Service and the EXIM Bank. He co-founded and was the co-chairman of Roll and Ross Asset Management Corp., an equity money manager, chairman of the American Express Advisory Panel, and a former director of General Re and of CREF. He is currently Chairman of the Investment Advisory Board of IVC International, Ltd., a director of IV Capital, Ltd., a former member of the board of directors of Freddie Mac, and a trustee of CalTech where he chairs the investment committee.

Web Site: http://www.compensationevaluation.com

Working Papers: http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=26373