Caltech Economist Richard Roll Wins Onassis Prize in Finance

Richard Roll, the Linde Institute Professor of Finance at Caltech, has been named one of two recipients of this year’s Onassis Prize in Finance. Awarded only once every three years, the Onassis Prizes honor the contributions of top thinkers in the fields of finance, international trade, and shipping.

“As the Linde Professor of Finance, Richard Roll anchors a revitalized program in finance at Caltech that is now making great strides in both original research and in improving the course offerings for both undergraduate and graduate students,” says Jean-Laurent Rosenthal, chair of the Division of the Humanities and Social Sciences at Caltech. “It is wonderful to see him recognized with this prestigious prize.”

The Onassis Prizes are awarded jointly by the Alexander S. Onassis Public Benefit Foundation and the Cass Business School, part of City University London. Roll shares this year’s award for finance with Stewart Myers, an economics professor at MIT.

“The Onassis Prize in Finance has been awarded previously to Nobel laureate Eugene Fama, Caltech trustee and Deutsche Bank Prize recipient Stephen Ross, along with my esteemed corecipient this year, Stewart Myers. I am humbled and deeply honored to be included in such company,” says Roll.

In a statement, the Cass Business School and Onassis Foundation noted, “This year’s winners have made foundational contributions to finance since the beginning of its transformation to a rigorous science-based discipline, nearly a half century ago: Stewart Myers in corporate finance and Richard Roll in capital markets.”

Roll is known for his work on portfolio theory—the design of optimal investment portfolios—and asset pricing. His most widely cited paper has come to be known as “Roll’s Critique.” That work cast into doubt empirical tests of the capital asset pricing model, then a premier model of risk and return. Roll has also collaborated with Caltech alumnus and trustee Stephen Ross (BS ’65) to test Ross’s alternative model of risk and return known as the arbitrage pricing theory. Roll continues to work in this area; in his most recent working paper, he proposes a new way to test the most prominent modern asset pricing theory.

Roll joined the faculty at Caltech in 2014 after spending nearly 40 years at the UCLA Anderson School of Management. He has also held faculty positions at Carnegie-Mellon University, the European Institute for Advanced Study of Management in Brussels, and the French business school Hautes Études Commerciales near Paris.

He earned his undergraduate degree in aeronautical engineering from Auburn University. He then was employed by Boeing, where he worked on the 727 and wrote the operating manual for the first stage booster of the Saturn moon rocket, while earning his MBA at the University of Washington. Realizing that he was more interested in business than engineering, he quit his job and completed a PhD in economics, finance, and statistics at the University of Chicago.

In addition to his academic positions, Roll has founded several companies and has served as a consultant to numerous governmental agencies and corporations. He was a vice president of Goldman, Sachs & Co. from 1985 until 1987. He also served as president of the American Finance Association in 1987.

Roll has published more than 100 peer-reviewed articles and has won Graham and Dodd Awards for financial writing four times. Among other achievements, Roll has won the Leo Melamed Award for outstanding scholarship by a business school professor (1990), the Roger F. Murray Prize from the Institute for Quantitative Research in Finance (2001), and the Nicholas Molodovsky Award from the Association for Investment Management Research (2002), and was named “Financial Engineer of the Year for 2009” by the International Association of Financial Engineers. He is also a fellow of the Econometric Society.

The winners of the Onassis Prizes were announced by Alderman Alan Yarrow, the Lord Mayor of London, at Mansion House in London on March 20. Roll and the other 2015 honorees will receive their awards at a ceremony in September.