Congratulations to Professor Ray Ball

Yesterday I read the news that my friend Professor Ray Ball received an award.  Big hearty congratulations to him.  Like me, he likes to cook and drink good wine.

He is a PhD Economist that has done a lot of research in the field of accounting.  In 1968, he wrote a paper on “An Empirical Evaluation of Accounting Income Numbers” which was published in the Journal of Accounting Research.

It was groundbreaking.

He received the Wharton-Jacobs Levy Prize along with co-author Phil Brown.  Professor Brown is also a PhD economist from Chicago. The prize is given biennially.  If you are an academic and receive the prize, it’s highly likely that you received a Nobel Prize.  Harry Markowitz and William Sharpe received previous prizes.

Ray also authored another ground breaking paper.  “Anomalies in Relationships between Securities’ Yields and Yield surrogates,” published in the Journal of Financial Economics in 1978.   It was the first academic reference to systematic anomalies in the theory of efficient markets.

Transparency is key to free markets operating well.  Transparent price, and transparency in earnings give a lot of information to market participants so they can make better decisions.

The academic side of finance/accounting/economics can be super boring.  But, quite often there are some really great papers that can give you guidance and make you think.   You might think about things differently.  I read academic studies from time to time because as a VC, you have to get out of your box, out of heuristics, and think differently.

Ray’s papers have challenged convention and caused investors to think, and engage with the market differently.