The first series of lectures by one of the world’s leading experts in the filed of financial policy took place at both Lauder Business School and Webster University this spring.
Lauder Business School had the privilege of welcoming Professor Joel Stern to teach his course ‘The Theory and Policy of Modern Finance’ in the Spring of 2014. The course has received universal acclaim and LBS is looking forward to continuing this successful co-operation in the future.
Professor Stern’s principal contribution to the field of financial economics has been in performance measurement and corporate governance, for example formalizing the Free Cash Flow (FCF) methodology. The course focused on problem solving and applications for the theories of modern finance, with an emphasis being placed on showing the methods and effectiveness of how these theories can be applied in practice. The skill of doing so is a key component for the future success of students in the real world of business and government institutions. The applied-science learning concept at LBS, which is also essential to the new Banking and Finance curriculum, reflects these issues at the heart of Professor Stern’s teaching, ensuring a fruitful and lasting partnership with the Lauder Business School. Merton Miller once said, “There is no better theory than one that can be applied in the real world.”
The course focused on problem solving and improving modern financial theories. Due to the need for a period-by-period contemporaneous measure of performance, Professor Stern had developed the Economic Value Added (EVA®) theory. EVA was developed to not only replicate the benefits of the Free Cash Flow theory, but also to provide a measure of performance that could be incentivized and at all levels of the firm, so that incentives could be provided right down to the shop floor.
More than 860 companies such as Siemens in Germany have implemented this EVA Management System to measure performance, prioritize on capital expenditures including acquisitions, as well as to provide an incentive compensation system.
Professor Stern is also an active member of the Jewish Community, having trained as a cantor and conducting services on all of the major holidays in the Jewish calendar since his 16th birthday. At Lauder there was also an opportunity to experience a Shabbat service conducted by the Professor.
Currently, four LBS students are under consideration to join Stern Value Management in New York. According to Professor Stern, these positive results in a short period of time illustrate the quality of both the Lauder Business School and the students who are attracted by the curriculum. Professor Stern commented that there are few cities in the world as beautiful and tastefully designed as Vienna, as an additional positive aspect of teaching here.
Background Professor Stern:
Joel M. Stern founded Stern Stewart & Co., in 1982 and serves as its Chief Executive Officer. Mr. Stern served as Managing Partner of Stern Stewart & Co. Prior to that, Mr. Stern served as President of Chase Financial Policy, the financial advisory arm of Chase Manhattan Bank. He has been a pioneer and leading advocate of the concept of managing for shareholder value.
Mr. Stern is a recognized authority on financial economics, corporate performance measurement, corporate valuation, and incentive compensation. Apart from teaching at LBS, he is an adjunct professor at six other Graduate Schools of Business including Columbia University, where he has been teaching since 1976.
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