Masters of Finance

Foster’s Department of Finance and Business Economics has quietly become a global powerhouse in research and teaching

The UW Foster School of Business is a long way from Wall Street.

An entire continent separates Seattle, the globally renowned catalyst of innovation, and New York, the globally recognized capital of finance. And to those who care about financial pedigree, that’s a division as metaphoric as it is geographic.

Just don’t try to tell Lauren Krainski (MBA 2018) that Foster is not a finance school.

The second-year MBA student lit up her investment banking internship at Deutsche Bank last summer, earning lead roles on live M&A deals and fielding the questions of her fellow interns, most of whom hailed from the traditional finance powers and came with some serious advantages—finance backgrounds, deep dives into investment banking practicums, vast industry alumni networks. Pedigree.

What they didn’t have? Thomas Gilbert and Sarah McVay and Stephan Siegel and Lance Young in their heads. Krainski credited her personal A-team of Foster professors with instilling in her the critical concepts of financial modeling, financial statement analysis and M&A negotiations so deeply and indelibly that her scale-up to Wall Street’s unrelenting pace became, comparatively, a piece of cake. And for any question that arose over the summer, they were only an email or phone call away.

“I almost could not believe how well I was prepared—and prepared versus everyone else who had so many more advantages and opportunities than I had,” says Krainski. “Foster is an amazing place for finance.”

Performance over pedigree

This assertion is more than one woman’s opinion.

The Department of Finance and Business Economics is ranked #5 in the world in research productivity in the discipline’s top four journals over the year 2017—and #4 when you weight each school’s productivity by its number of research faculty.

Foster faculty members serve on the editorial review boards of every major finance journal, including the top-four Journal of Finance and Quantitative Analysis, which has been published by the school since 1966.

Finance has also produced many of the UW’s most-effective educators, including 10 of the first 20 recipients of the PACCAR Award for Excellence in Teaching, the Foster School’s highest honor.

So what’s the secret sauce? How did Foster become world-class in finance so quietly—so remotely (to those who subscribe to an East Coast bias)?

On the shoulders of giants

Department chair Jarrad Harford, the Paul Pigott-PACCAR Professor in Business Administration, believes that current successes have built upon a solid foundation.

The early Foster School was led by a string of visionary economists, including Stephen Miller, Howard Preston and Austin Grimshaw. Dean Kermit Hanson recruited Stephen Archer, who chaired the department through the 1960s, leading the field’s transformation from descriptive to prescriptive research using advanced statistical analyses. Archer worked alongside William Sharpe, who conducted most of his Nobel-Prize winning work developing the Capital Asset Pricing Model (CAPM) while on faculty in the 1960s. And Sharpe’s student and research collaborator Nancy Jacob became the first woman to lead the Foster School—or any major American b-school—as dean in the 1980s.

The most important bridges to the present include emeritus professors Larry Schall, who chaired the department for much of the past three decades, Alan Hess, who brought a deep knowledge of financial institutions and monetary policy that earned him a UW Distinguished Teaching Award, and Rocky Higgins, a PACCAR and UW Distinguished Teaching Award winner and faculty director of the Pacific Coast Banking School.

And generations of Foster grads will fondly remember PACCAR Award winners Ali Tarhouni, who departed to lead reform in his native Libya during the Arab Spring, and Karma Hadjimichalakis, who made such an impression with her level-headed macroeconomic lessons that she was honored by the U.S. House of Representatives upon her untimely death in 2010.

A golden age

These trailblazers have paved the way to what can only be called a golden age of finance at Foster. Harford says it has everything to do with the current lineup of exceptional scholars and educators who have assembled in PACCAR Hall. He credits a vital infusion of private support as essential to attract—and retain—some of the foremost minds in the ultra-competitive field of finance.

This includes some of the discipline’s most eminent modern scholars (Harford, Philip Bond, Ran Duchin, Jon Karpoff), inquisitive innovators (Kathy Dewenter, Chris Hrdlicka, Andy Siegel, Stephan Siegel), academic leaders (Bill Bradford, Avi Kamara, Paul Malatesta), and transformational educators (Thomas Gilbert, Jennifer Koski, Lance Young—“who could teach self-impalement and people would line up for their course,” Harford jokes).

They choose to stay, he believes, because of the many assets of Seattle, the Foster School’s world-class campus and, perhaps most of all, a department with a culture of genuine collegiality, an environment scarcely found in the sharp-edge world of finance.

“Success breeds success,” adds Harford. “It’s a global market for academic talent, and everyone knows where everyone is. Here, we’ve got a productive place with people you want to be working with and talking to every day.”

The wide world of finance

Research productivity may be the most objective measure of a finance faculty’s quality. But teaching is the most meaningful for students. Today, 20 percent of Foster MBAs and 25 percent of Foster BAs graduate into finance positions.

Count Alina Moraru (MBA 2013) a satisfied customer.

“The finance education I received at Foster not only prepared me well for a career in corporate finance, but also gave me the breadth and knowledge needed to understand the ‘why’ behind my work and the broader implications of my decisions,” says Moraru, a senior finance manager at Amazon. “The knowledge gained at Foster enables me to see the bigger financial picture of my company, which becomes increasingly important as I grow my career.”

Luis Silva-Behrens (BA 2006), an executive director at JPMorgan Chase, describes his finance training at Foster as “complete and well-rounded,” and his overall experience as “dynamic. I didn’t necessarily know it then, but a dynamic undergraduate experience is a valuable asset for starting in today’s business world. A rigorous academic curriculum, a vibrant and diverse student body, numerous opportunities to enhance my experience with deeply rooted student organizations and other extracurricular offerings… all of these experiences helped prepare me to work in an industry that is challenging, fast-paced and always changing.”

As for Lauren Krainski, despite having written her ticket to a lucrative career in investment banking, she decided that her passion lies outside of Wall Street. Seattle, it turns out, is full of finance opportunities she finds infinitely more fascinating.

While finishing her degree, Krainski rose to associate director of the new startup incubator at the Allen Institute for Artificial Intelligence. “Being able to make high-level finance decisions on emerging AI companies while also applying my skills in diligence and research is a pretty thrilling proposition,” she says.

Applying finance to innovation… what could be more Foster than that?