Research papers on a contrary view of fiduciary investment decision-making and on ambiguity in stock prices as a distinct factor from risk were winners of prizes of $10,000 each in the new IRRC Institute Research Awards.
The winners were announced Tuesday by the Investor Responsibility Research Center Institute.
Steve Lydenberg received the practitioner award and $10,000 for “Reason, Rationality and Fiduciary Duty.” It examines the advantages of fiduciaries' use of a "reasonable," as opposed to a "rational," approach in investment decision-making, arguing that “a combination of reason and rationality … is necessary for a comprehensive undertaking of fiduciary practice,” according to a statement from the IRRC Institute.
Mr. Lydenberg is a partner for strategic vision and direction at Domini Social Investments and founding director of the Initiative for Responsible Investment at the Hauser Center for Nonprofit Organizations at Harvard University
Menachem Brenner, research professor of finance, and Yehuda Izhakian, visiting scholar, both at the Stern School of Business, New York University, won the academic award for their paper, “Asset Pricing and Ambiguity: Empirical Evidence.” It found that stock prices are impacted by ambiguity, which is distinct from risk, the statement said. In their paper, the co-authors show “that risk is positively correlated to the market equity risk premium, while ambiguity tends to be negatively correlated,” the statement said.
The prizes were financed from the institute's $5 million endowment. It expects to announce plans for the 2013 awards in several weeks.
The papers are available at Pensions & Investments' website.