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Andrei Shleifer

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Andrei Shleifer
Born (1961-02-20) February 20, 1961 (age 63)
Moscow, Soviet Union
NationalityRussian American
Academic career
FieldFinancial economics
Behavioral finance
Law and economics
Development economics
InstitutionHarvard University
School or
tradition		New Keynesian economics
Alma materMIT
Harvard University
InfluencesPeter A. Diamond
Lawrence Summers
AwardsJohn Bates Clark Medal (1999)
Information at IDEAS / RePEc

Andrei Shleifer (/ˈʃlaɪfər/ SHLY-fər; born February 20, 1961) is a Russian American economist. He served as project director of the Harvard Institute for International Development's Russian aid project from its inauguration in 1992 until it was shut down in 1997.[1] In 1999, Shleifer was awarded the John Bates Clark Medal, which was then 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. He is currently ranked the most influential economist in the world according to IDEAS/RePEc,[2] and is listed #1 in the category "Most-Cited Scientists in Economics & Business".[3]

Life

He was born in Soviet Union 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.[4] He then studied economics, obtaining his B.A. 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.[4] Shleifer also met his mentor and professor Lawrence Summers during Shleifer’s undergraduate education at Harvard. The two went on to be “co-authors, joint grant recipients and faculty colleagues.”[1] Summers resigned from his position as President of Harvard University in 2006 in part due to concerns that his relationship with Andrei Shleifer constituted a financial conflict of interest.

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.[5]

Work

Shleifer's 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 founded 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.[6]

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 Russian privatization. During that time, the Harvard Institute for International Development of 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. In a period from 1992 to 1997, the Harvard Institute for International Development (HIID) under Shleifer received $40 million directly from the $300 million budgeted for the United States Agency for International Development. Additional sums were given in grants to public relations firm Burson-Marsteller and Big Six accounting firms.[1]

Shleifer was also tasked with establishing a stock market for Russia that would be a world-class capital market. That effort became mired in charges of corruption and self-dealing.[7]

While in Russia working as the project director of the HIID, Andrei Shleifer was an adviser to the State Property Committee (Russian acronym GKI), a board member of the Russian Privatization Center, and a USAID-paid advisor to the Russian Federal Securities Commission.[1]

Two decades after meeting Shleifer at Harvard, Lawrence Summers’ work as the undersecretary of the Treasury, the deputy secretary of the Treasury, and the secretary of Treasury put him in place to design U.S economic policies in such a way to allow and facilitate Shleifer’s work on the Harvard Project.[1] Summers "helped Shleifer and Harvard gain noncompetitive government awards”.[8] In 1996 complaints about the Harvard Project led Congress to launch a General Accounting Office investigation, which concluded that the Harvard Institute for International Development was given "substantial control of the U.S. assistance program.” Such an arrangement was “highly unusual”, according to Louis H. Zanardi, who led the GAO investigation.[9]

Lawsuit

The Cooperative Agreement signed in 1992 by the Harvard Institute and USAID for the purpose of creating the Russian reform project included this paragraph under “Regulations Governing Employees”:

Other than work to be performed under this grant for which an employee is assigned by the grantee, no employee of the grantee shall engage directly or indirectly, either in the individual's own name or in the name or through an agency of another person, in any business, profession, or occupation in the foreign countries to which the individual is assigned, nor shall the individual make loans or investments to or in any business, profession or occupation in the foreign countries to which the individual is assigned.[10]

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.[11] 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.[12]

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 worth of damages, though he did not admit any wrongdoing. A firm owned by his wife previously had paid $1.5 million in an out-of-court settlement.

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.[5]

Works

  • Boycko, Maxim (1995). Privatizing Russia. Cambridge, MA: MIT Press. ISBN 0-262-02389-X. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  • Shleifer, Andrei (1997). "A Survey of Corporate Governance". Journal of Finance. 52 (2): 737–783. doi:10.2307/2329497. JSTOR 2329497. {{cite journal}}: Cite has empty unknown parameter: |month= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  • La Porta, R. (1998). "Law and Finance". Journal of Political Economy. 106 (6): 1113–1155. doi:10.1086/250042. {{cite journal}}: Cite has empty unknown parameter: |month= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  • La Porta, R. (1999). "Corporate Ownership Around the World". Journal of Finance. 54 (2): 471–517. doi:10.1111/0022-1082.00115. {{cite journal}}: Cite has empty unknown parameter: |month= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  • La Porta, R. (2000). "Investor Protection and Corporate Governance". Journal of Financial Economics. 58 (1–2): 3–27. doi:10.1016/S0304-405X(00)00065-9. {{cite journal}}: Cite has empty unknown parameter: |month= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  • Shleifer, Andrei (2000). Inefficient Markets: An Introduction to Behavioral Finance. Oxford, UK: Oxford University Press. ISBN 0-19-829227-9. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
  • Djankov, S. (2002). "The Regulation of Entry". Quarterly Journal of Economics. 117 (1): 1–37. doi:10.1162/003355302753399436. {{cite journal}}: Cite has empty unknown parameter: |month= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  • Djankov, S. (2003). "Courts". Quarterly Journal of Economics. 118 (2): 453–517. doi:10.1162/003355303321675437. {{cite journal}}: Cite has empty unknown parameter: |month= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  • Botero, J. (2004). "The Regulation of Labor". Quarterly Journal of Economics. 119 (4): 1339–1382. doi:10.1162/0033553042476215. {{cite journal}}: Cite has empty unknown parameter: |month= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  • Mulligan, C. (2005). "Conscription as Regulation". American Law and Economics Review. 7 (1): 85–111. doi:10.1093/aler/ahi009. {{cite journal}}: Cite has empty unknown parameter: |month= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)

References

  1. ^ a b c d e Wedel, Janine. Shadow Elite: How the World's New Power Brokers Undermine Democracy, Government, and the Free Market. New York: Basic, 2009.
  2. ^ "Economist Rankings at IDEAS". Ideas.repec.org. Retrieved 2011-09-13.
  3. ^ "Most-Cited Scientists in Economics & Business" ISI Web of Knowledge
  4. ^ a b Bhayani, Paras D. (June 4, 2007). "Andrei Shleifer and J. Bradford DeLong". Harvard Crimson. Retrieved 2009-03-12.
  5. ^ a b Bombardieri, Marcella (2006-10-14). "Harvard professor loses honorary title in ethics violation". Boston Globe. {{cite news}}: Cite has empty unknown parameter: |coauthors= (help)
  6. ^ [1][dead link]
  7. ^ [2][dead link]
  8. ^ "Harvard's role in US aid to Russia" (PDF). The Boston Globe. Retrieved 2011-11-11.
  9. ^ "Who Taught Crony Capitalism to Russia?". The Wall Street Journal Europe. March 19, 2001. Retrieved 2011-11-11.
  10. ^ United States District Court, District of Massachusetts, United States of America, Plaintiff, v. President and Fellows of Harvard College, Andrei Shleifer, Jonathan Hay, Nancy Zimmerman, and Elizabeth Hebert, Defendants.
  11. ^ [3][dead link]
  12. ^ "The Harvard Crimson :: News :: Harvard To Pay $26.5 Million in HIID Settlement". Thecrimson.com. 2005-07-29. Retrieved 2011-09-13.

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