Financial economist inspired by early Monash influences

August 2007

Stephen Brown’s career in economics has taken him from Melbourne to New York, with stops in Sweden and the UK. The Monash alumnus currently holds a prestigious position as the David S Loeb Professor of Finance at New York University’s Stern School of Business.

Professor Brown (BEc(Hons) 1972) is an expert in the field of financial economics, recognised particularly for his leading work on hedge funds. In March 2007, an important committee of the United States Congress called Professor Brown to testify about the level of financial disclosure by hedge funds.

Professor Brown’s interest in finance and economics was inspired by his father. “My father was an accountant and company secretary in Melbourne and was fascinated by finance and the working of the markets,” Professor Brown said.

After completing his Bachelor of Economics, Professor Brown completed his honours year in econometrics. “The two most influential people in my career at Monash were Professor Alan Powell who taught Econometrics at Monash and has recently retired, and my growth tutor Frank Milne who is now Chair of Economics at Queen’s University in Ontario, Canada. They remain very close family friends to this day.”

Supported by a Monash Travelling Fellowship and encouraged by the university to study overseas, Professor Brown completed his MBA and doctorate at the University of Chicago. The university is exceptionally strong in economics, with its staff winning nine Prizes in Economic Sciences in Memory of Alfred Nobel since 1976. “Chicago was, of course, well known at the time, but I have to admit it was the particularly warm welcome from Chicago which led me to go there. It was not really until I arrived there that I discovered the nature of the place, the heights of its intellectual accomplishment (and the depths of Chicago’s winters!).”

Professor Brown worked at Bell Telephone Laboratories after completing his PhD. It was at Bell that he developed his most cited work – an investigation of ways to measure the information in corporate events, by looking at the impact on security prices. “These so called ‘event studies’ have application in legal proceedings, where they are used to assess the impact of insider trading and accountancy, where they help to determine whether particular information releases are material to investors. Economists also use the studies to find out if capital markets are efficient in the way in which they process information.”

Although he has now lived in the USA for many years, Professor Brown retains strong links with his Monash honours colleagues. “My honours class was very cohesive as a group and we have kept in touch over the years,” he said. “We came together again as a group in response to the sad events at Monash on October 21st 2002 despite the years and the distance that separates us. Our group, along with Frank Milne’s cohort and friends from other years, raised funds to support two Econometrics Honours Memorial Scholarships.”

Links:

Stephen Brown’s research at Stern School of Business