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News & Events

Kellogg doctoral student wins $25,000 Lehman prize in finance

Zhiguo He shines stars in prestigious research competition; colleague David Dicks also recognized

By Adrienne Murrill

1/18/2008 - Two Kellogg School doctoral students recently won top honors in the Lehman Brothers Fellowship for Research Excellence in Finance.

Kellogg doctoral student Zhiguo He
Kellogg doctoral student David Dicks
Photo © Nathan Mandell
In December, finance PhD student Zhiguo He won first place and $25,000, and his colleague David Dicks was one of four runners-up, winning $2,500.

Zhiguo is expecting to finish his PhD in 2008, which will complement his experience as a post-doc at Princeton University’s Bendheim Center for Finance (2001-2003) and the master’s degree in finance he received in 2001 from Tsinghua University in Beijing, China. His research interests include contract theory and implications for asset pricing, as well as corporate finance and banking. Zhiguo won the fellowship for his paper titled “ Dynamic Compensation Contracts with Private Savings.”

The paper studies optimal contracting issues, specifically the dynamic agency problem of a risk-averse agent controlling a firm’s profitability through “unobservable actions” and private savings. Among the author’s conclusions is that “seemingly inefficient compensation schemes [e.g. generous financial terms bestowed in a severance package] can indeed be optimal” when considered in light of “realistic contracting frictions.”

David Dicks also expects to finish his doctorate in 2008, pursuing r esearch interests in corporate finance, corporate governance, contracting and insurance. His winning paper was “Executive Compensation, Incentives, and the Role for Corporate Governance Regulation,” in which he asks why corporate governance is regulated. He proposes that “a pecuniary externality operating through executive compensation will motivate a role for corporate governance regulation.”

Mike Fishman, the Norman Strunk Professor of Financial Institutions, is the adviser for both students. “Besides the personal glory for Zhiguo, it’s a very nice honor for the Kellogg doctoral program,” Fishman said.

“Our PhD students work very hard and it's nice to see their efforts honored and rewarded in this way,” Fishman added. “It also serves to provide some extra motivation for our other students.” The Kellogg professor cited Zhiguo’s strong economic intuition, technical skills and work ethic as factors in his academic success.

Since 1998, the Lehman Brothers fellowship has endeavored to promote high-quality dissertation research among finance doctoral students, including by rewarding creative and original research with the potential of resolving outstanding issues in finance. Doctoral students from the top U.S. business schools, as well as the London School of Business, are invited to apply for the fellowship. Lehman employees then narrow the field to five finalists. In the final round, these students present their research in New York, where a panel of finance scholars selects the winner.

This year’s panel was composed of experts from Carnegie-Mellon, the University of Chicago and UCLA. Fishman said Lehman Brothers is very generous in its support of doctoral students through this fellowship.