London Business School’s Alex Edmans

Selina Johansson

Alex Edmans LBS

Alex Edmans, professor of finance at London Business School, is the 2021 Poets&Quants MBA Professor of the Year. In his classrooms and public lectures. he often talks about finding passion and purpose in your life and career. (Courtesy photo)

As an assistant professor of finance at The Wharton School, Alex Edmans often left others wondering where he’d pop up next.

There he was skating up and down the ice as captain of one of Wharton’s hockey teams, or walking the runway of an MBA fashion show, or jamming in the Battle of the Bands. He appeared in three Wharton Follies musicals. He donned gloves for the Wharton V. Penn Law Fight Night, boxing in the Blue Horizon boxing ring, made famous by Rocky Balboa himself.

As head coach for DetermiNation Philadelphia, the American Cancer Society’s endurance program, Edmans coached a group of Wharton MBAs through the city’s half and full marathons. After finishing his half, he ran back to the 12-mile mark to cheer on his students and run their last miles with them. He then ran to mile 25 to do the same for students running the full marathon. Wharton Against Cancer raised more than any other team, and it remains one of Edman’s proudest teaching moments.

Alex Edmans

Alex Edmans

Alex Edmans, at right, boxed during the Wharton V. Penn Law School Fight Night. (Courtesy photo)

“He was almost like the ‘Where’s Waldo?’ of Wharton. He was popping up everywhere, and I was thinking, ‘I don’t have the time to do 25% of what he does. How does he find the energy? When does this guy sleep?” says Luke Taylor, a Wharton professor of finance who joined the business school one year after Edmans in 2008.

“Alex is a truly unique person in our profession. He is uniquely successful as a scholar – he is one of the most successful researchers of his generation,” Taylor tells Poets&Quants. “And he is uniquely successful as a teacher. I think one of the reasons students love him is that he connects with them, and not just in the academic sense. He creates relationships with them and speaks to them about bigger picture things like purpose and what it means to have a meaningful career. I think they really appreciate that.”

POETS&QUANTS MBA PROFESSOR OF THE YEAR: ALEX EDMANS

In between the extracurriculars, Edmans, now a professor of finance at London Business School, pioneered research in corporate social responsibility (CSR) years before it became fashionable. He’s presented his research at the World Economic Forum in Davos and testified before the British Parliament. His TED Talk on what to trust in a post-truth world and a TEDx Talk at LBS on the social responsibility of business have garnered more than 2.4 million views.

He consults regularly with business practitioners and is the managing editor of the Review of Finance, one of the world’s premiere finance journals. He’s also won countless teaching awards –- as a teaching assistant at MIT, as an assistant and associate professor of finance at Wharton and as a professor at LBS.

For his pioneering research in CSR; for his impact and influence on hundreds of MBA students; and for his exhaustive efforts to disseminate research to not only business practitioners but a much wider audience, Alex Edmans is Poets&Quants‘ MBA Professor of the Year.

Edmans is the fifth professor to earn the honor. Past winners include Harvard’s Deepak Malhotra (2020), UVA Darden’s Lalin Anik (2019), Stanford’s Jennifer Aaker (2018), and Darden’s Greg Fairchild (2017).

“He has taken a personal body of research and converted it into something that has impact across three key communities: the academic community where he continues to be a leading light in producing top-quality research, his student community where he uses that research to teach key concepts around finance and responsibility, and the practitioner community where he’s had a real influence on policy and practice around the responsible business agenda,” says Tom Gosling, Executive Fellow of Finance at LBS, a position that connects the academic research of LBS faculty with corporate leaders.

“I just don’t see many people having that balanced of an impact across those three constituencies, with each one feeding off the other in a very successful way. I think that’s quite an inspirational model for other people in the profession.”

ON SOCCER, THE STOCK MARKET, AND FINDING ONE’S PASSION

People who know Edmans describe him as a generous colleague with boundless energy. He is tireless in his pursuit of a wide range of interests — from music to sports, to teaching, to rigorous scholarship — and he often talks about finding one’s passions in his lectures and public engagements. (You can find his lectures and talks all over YouTube or on his personal website.)

It’s not that he has endless energy, he says, but that he only pursues the things that energize him. That means saying “no” when necessary. “If a research project has a good chance of being published in a top journal, but I’m not passionate about the topic, I won’t do it,” he says.

Alex Edmans

Growing up in Reading, England, Edmans played for the national junior chess team and was a fanatic about soccer. (He told Poets&Quants in 2017 that if he wasn’t a business-school professor, and if ability were no object, he’d be the manager of a Premier League soccer club.) In his A-levels – the U.K.’s subject-based qualifications for getting into university – he studied a mix of STEM and humanities courses instead of picking one track as most students do. He studied economics at the University of Oxford because the English approach to the subject invites deep, lively debate.

“This is why I really like economics and business: On the one hand, you have some theories so it’s not purely subjective, but it’s not like physics where there’s a right or wrong answer,” Edmans tells Poets&Quants. “We can look at different theories of optimal taxation, for example, and I could argue that taxes should be higher, and you could argue that taxes should be lower. And we can both respect each other’s opinions.”

Edmans worked in investment banking at Morgan Stanley for about 2 years after university. He liked being 21 years old, in the room with the CFOs of top companies and working on complex deals that could shape the company’s future. His first big deal was covered by the Financial Times.

“And the day after, it just completely disappeared. I thought, ‘I spent seven, eight months of my life working on one company’s problems at one point in time,” Edmans says. “As a professor, if you find a general result, let’s say the effect of corporate governance on firm performance, well that’s timeless. That will apply to many companies in different industries across different periods of time.”

NEXT PAGE: Researching the business case for responsibility

Alex Edmans’ TEDTalk, ‘What to trust in a “post-truth” world’ was recorded in May, 2017, at London Business School.

RESEARCH: THE BUSINESS CASE FOR RESPONSIBILITY

Edmans switched to academia in 2003, attending MIT Sloan as a Fulbright Scholar and earning his PhD in Financial Economics. He won the MIT Sloan Outstanding Teaching Assistant of the Year as well as the MIT Graduate Teaching Award. He also published his first paper: “Sports Sentiment and Stock Returns,” studying the effects of soccer results on the stock market.

“Basically, what I wanted to show was that markets are inefficient; they’re affected by emotions and psychology,” he says. “What I found was that when a country is knocked out of the World Cup, the market goes down a lot because of bad mood and investor sentiment. So that was a paper that got me onto not just CNBC and CNN, but also ESPN.

“And I thought, this is really cool. Research is something that can be interesting, and it is something that can impact everybody.”

In 2011, as an assistant professor at Wharton, Edmans published a paper considered a pioneering work in CSR: “Does the stock market fully value intangibles? Employee satisfaction and equity prices.” In it, he compared the long-term returns of companies listed on Fortune magazine’s “100 Best Companies to Work For in America” and found that they outperformed companies that did not make the list. While leaders in CSR often make the ethical case for corporate social responsibility – treating employees well is the right thing to do, for example – Edmans set out to study the business case – treating employees well is profitable in the long run.

“Back then, CSR was an unfashionable thing to be researching. He was taking a big risk at that time in studying it,” Taylor says. For a long time, finance research followed the Milton Friedman paradigm that said the purpose of a company is to maximize shareholder value. Then, Edmans’ came along and showed that companies that were taking actions not for the sole purpose of maximizing profits were also profitable.

“He helped reconcile the two views by showing that actually when companies treat their employees well, it does seem to be good for the company’s future profits,” Taylor says. “I admire that paper, and clearly the profession does too – look at how many times it’s been cited.”

‘GROW THE PIE: HOW GREAT COMPANIES DELIVER BOTH PURPOSE AND PROFIT’

Shortly after earning tenure at Wharton in 2013, Edmans joined the faculty of London Business School where he is academic director of LBS’ Centre for Corporate Governance.

In 2018, he was appointed as Mercers’ School Memorial Professor of Business at Gresham College, in which he gives a series of free lectures for the public which are streamed to a global audience. His 2018 series, “How Business Can Better Serve Society,” were adapted from his book, Grow the Pie: How Great Companies Deliver Both Purpose and Profit, published in March 2020. The book, a Financial Times’ Best Books of 2020, uses research, data and real-life examples to argue that when companies work to serve society, they often end up more profitable than when chasing profits alone.

Jessica Ground, Global Head of ESG at Capital Group, has worked in investment management for 24 years. In 2014, she noticed that a lot of her most successful investments were coming from companies that endeavored to operate with responsibility and purpose, and she wanted a better, more data-driven way to analyze how companies were creating value. That led her to Edmans’ employee satisfaction paper, and she started engaging with Edmans through her work. Edmans, in turn, asked her to speak at his Grow the Pie launch (which was delayed because of the pandemic.)

Jessica Ground

Jessica Ground

Jessica Ground

“I think what resonates with Alex’s work, and I talked a little bit about this in my introduction, is that it’s very easy to say that businesses should have purpose because who’s gonna say that’s a bad thing. But Alex looks at purpose in a way that links back to how you can create value. And he really shows people how to do it. He thinks about solving problems in a data-driven way,” Ground says.

“Purpose untethered from profit or from what the business is good at doesn’t add value. It needs to be thoughtful.”

‘BEING A PROFESSOR IS ABOUT THE CREATION OF KNOWLEDGE’

In his MBA classrooms, Edmans strives to teach beyond, say, the calculation for the weighted average of the cost of capital – which he does teach, his students say, in clear, real-world language. He wants to educate the whole student. He combines the theory and formulas with lessons on public speaking, finding purpose and passion, mental and physical well-being, time management, and more.

Students seem to appreciate the approach. He racked up more than 14 teaching awards at Wharton, including ones designated as “tough but (students will) thank this professor in five years.” At LBS, he won Best Teacher awards in both the MBA and Masters in Financial Analysis programs and the Excellence in Teaching award for best professor across all programs.

I love being a professor because it’s about the creation of knowledge. The creation of knowledge involves researching big, creative, open questions and taking risks. The dissemination of knowledge involves teaching even though teaching isn’t necessarily rewarded,” Edmans tells P&Q.

“It’s a privilege to meet hundreds of smart young students every year and teach them skills that they will use to run companies, allocate capital, and lead fulfilling and purposeful lives … I’m grateful for the teaching awards that I get, but I don’t get them because my classes are entertainment or because I used to play ice hockey with students. I get them because I tackle complex concepts rather than avoiding them, I try to relate the theory to the real world, and I bring in rigorous research wherever possible.”

Wharton Against Cancer

Wharton Against Cancer

Alex Edmans coached this team of Wharton MBA students in running the Philadelphia full and half marathons to raise money for the American Cancer Society.

TEACHING THE WHOLE STUDENT

Ben Corkin, MBA ‘22, met Edmans for the first time at Barry’s, a gym known for its high-intensity workouts. At that time, lectures were still happening over Zoom, so Edmans arranged for a limited number of students at a time to work out with him (if they wanted) so he could meet them in person. While Corkin considers himself pretty fit, he was no match for his lean, compact professor.

Before starting his MBA at LBS, Corkin was an engineer working on oil rigs. He wanted to pivot to the financial sector, and he wanted to study responsible business practices. He struggled, at first, in any class that had anything to do with financing. But Edmans’ clear instruction in real, everyday language guided him through.

“When he teaches, he presents the opposite side of the argument first, to eliminate biases and make sure that he’s being challenged in every way that he can,” Corkin says. “I think he genuinely cares about the world around him, and he genuinely cares about the influence that he has. A lot of his students are going to be in important positions, and he’s making every effort to influence at an individual level the people who are going to be making the decisions at these companies in the future.”

For Shivangi Kumra, MBA ‘23, Edmans’ was the only class she remembers in which students hung on his every word. He responded to every email. He took time to answer every question and pointed students to more resources when he couldn’t answer to his satisfaction. She was surprised how he could remember what students were interested in and that he went out of his way to further engage them.

For example, Edmans reached out to Kumra unprompted and invited her to an LBS investor forum based solely on a conversation on sustainable investing they’d had earlier in the semester.

“We’ve got 515 people in the MBA, and to remember what everyone’s interested in and then reach out to them, I think that’s special,” Kumra says. “He really cares about students, and it comes across in everything he does.“

DON’T MISS: DEAN OF THE YEAR: GIES’ JEFFREY BROWN or MBA PROGRAM OF THE YEAR: MICHIGAN ROSS’ FULL-TIME MBA

The post Poets&Quants’ Professor Of The Year: London Business School’s Alex Edmans appeared first on Poets&Quants.

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