Andrei Shleifer

Andrei Shleifer (pronounced /ˈʃlaɪfəʁ/) (born February 20, 1961) is a Russian American economist. In 1999, Shleifer was awarded the John Bates Clark Medal, awarded every two years to the most promising US economist under 40, for his seminal works on corporate finance (corporate governance, law and finance), the economics of financial markets (deviations from efficient markets), and the economics of transition, despite being a key adviser in the corrupt privitisation of Russia in the 1990's. He is currently ranked the second most influential economist in the world according to IDEAS/RePEc,^[1] and is listed #1 in the category "Most-Cited Scientists in Economics & Business".^[2]

Life

He was born in Russia to a Jewish family and emigrated to Rochester, New York, as a teenager in 1976, where he attended an inner-city school and learned English from episodes of Charlie's Angels.^[3] He then studied economics, obtaining his A.B. from Harvard University in 1982 and Ph.D. from MIT in 1986. As a freshman at Harvard, Shleifer took Math 55 with Brad DeLong; he has said that the course made him realize he was not destined to be a mathematician, but the experience gave him a future co-author.^[3]

He has held a post in the Department of Economics at Harvard University since 1991 and was, from 2001 through 2006, the Whipple V. N. Jones Professor of Economics.^[4]

Work

Andrei Shleifer is currently the most cited economist in the world, with more than ten thousand citations. (Citation rate is one measure of a scientist's impact on thought and practice in a particular field of endeavor.) His work focuses mostly on financial economics, where he has contributed to the field of behavioral finance.

In recent years, his research has focused on the legal origins theory (also sometimes known as law and finance theory), which claims that the legal tradition a country adheres to (such as common law or various types of civil law) is an important determining factor for a country's development, most of all financial development.

Shleifer and his coauthors (Rafael La Porta, Robert W. Vishny, Simeon Djankov and Florencio Lopez de Silanes) have written extensively on corporate governance.

In 1994 Shleifer had with fellow academics—and behavioral finance specialists—Josef Lakonishok and Robert Vishny a Chicago-based money management firm known as LSV Asset Management. As of February 2006 it managed about $50 billion in quantitative value equity portfolios, though, according to the firm's website, Shleifer no longer had an ownership stake.^[5]

Activities in Russia

During the early 1990s, Andrei Shleifer was an advisor to Anatoly Chubais, the then vice-premier of Russia, and was one of the engineers of the Russian privatization. During that time, Harvard University was under a contract with the United States Agency for International Development, which paid Harvard and its employees to advise the Russian government. The results of privatization in Russia were criticized widely in Russia and western academic circles. Under Anatoly Chubais, privatization led to valuable Russian business assets being acquired at extremely cheap prices amid accusations of rigged auctions.

Shleifer was also tasked with establishing a stock market for Russia that would be a world-class capital market. That effort was also unsuccessful, and became mired in charges of corruption and self-dealing.^[6]

Lawsuit

Under the False Claims Act, the US government sued Harvard, Shleifer, Shleifer's wife Nancy Zimmerman, Shleifer's assistant Jonathan Hay, and Hay's girlfriend (now his wife) Elizabeth Hebert, because these individuals bought Russian stocks and GKOs while they were working on the country's privatization, which potentially contravened Harvard's contract with USAID. In 2001, a federal judge dismissed all charges against Zimmerman and Hebert.^[7] In June 2004, a federal judge ruled that Harvard had violated the contract but was not liable for treble damages, but that Shleifer and Hay might be held liable for treble damages (up to $105 million) if found guilty by a jury.^[8]

In June 2005, Harvard and Shleifer announced that they had reached a tentative settlement with the US government. On August 3 of the same year, Harvard University, Shleifer and the Justice department reached an agreement under which the university paid $26.5 million to settle the five-year-old lawsuit. Shleifer was also responsible for paying $2 million dollars worth of damages, though he did not admit any wrong doing. A firm owned by his wife previously had paid $1.5 million in an out of court settlement.

Because Harvard University paid most of the damages and allowed Shleifer to retain his faculty position, the settlement provoked allegations of favoritism on the part of Harvard's outgoing president Lawrence Summers, who is Shleifer's close friend and mentor. Shleifer's conduct was reviewed by Harvard's internal ethics committee. In October 2006, at the close of that review, Shleifer released a statement making it clear that he remains on Harvard's faculty. However, according to the Boston Globe, he has been stripped of his honorary title of Whipple V. N. Jones Professor of Economics.^[4]

Works

• Boycko, Maxim; ———; Vishny, Robert (1995). Privatizing Russia. Cambridge, MA: MIT Press. ISBN 026202389X. 
• ———; Vishny, R. W. (1997). "A Survey of Corporate Governance". Journal of Finance 52 (2): 737–783. doi:10.2307/2329497. 
• La Porta, R.; López de Silanes, F.; ———; Vishny, R. W. (1998). "Law and Finance". Journal of Political Economy 106 (6): 1113–1155. doi:10.1086/250042. 
• La Porta, R.; López de Silanes, F.; ——— (1999). "Corporate Ownership Around the World". Journal of Finance 54 (2): 471–517. doi:10.1111/0022-1082.00115. 
• La Porta, R.; López de Silanes, F.; ———; Vishny, R. W. (2000). "Investor Protection and Corporate Governance". Journal of Financial Economics 58 (1–2): 3–27. doi:10.1016/S0304-405X(00)00065-9. 
• Shleifer, Andrei (2000). Inefficient Markets: An Introduction to Behavioral Finance. Oxford, UK: Oxford University Press. ISBN 0198292279. 
• Djankov, S.; La Porta, R.; López de Silanes, F.; ——— (2002). "The Regulation of Entry". Quarterly Journal of Economics 117 (1): 1–37. doi:10.1162/003355302753399436. 
• Djankov, S.; La Porta, R.; López de Silanes, F.; ——— (2003). "Courts". Quarterly Journal of Economics 118 (2): 453–517. doi:10.1162/003355303321675437. 
• Botero, J.; Djankov, S.; La Porta, R.; López de Silanes, F.; ——— (2004). "The Regulation of Labor". Quarterly Journal of Economics 119 (4): 1339–1382. doi:10.1162/0033553042476215. 
• Mulligan, C.; ——— (2005). "Conscription as Regulation". American Law and Economics Review 7 (1): 85–111. doi:10.1093/aler/ahi009. 

See also

• Corporate Governance
• Development economics
• Economic development
• Ethics
• List of economists
• Whipple V. N. Jones
• Transitology

References

External links

• Staff Member page @ Harvard University
• Citation rankings
• Institutional Investor: How Harvard Lost Russia
• Book review in Finance and Development (An IMF publication) of "Without a Map: Political Tactics and Economic Reform in Russia" by Andrei Shleifer and Daniel Treisman