Ulrike Malmendier is a professor of finance at the University of California Berkeley’s Haas School of Business in the US, where she has taught since 2006.
Prof Malmendier grew up in Germany and studied economics and law at the University of Bonn and Oxford university before doing her doctoral studies in economics at Harvard. In January 2013, she was the first woman to be awarded the Fischer Black Prize from the American Finance Association, which honours the top finance scholar under the age of 40.
Her research interests include corporate finance, behavioural economics, law and contract theory.
Who are your business heroes?
Though I have been inspired by people on the business side and policy side, such as Christine Lagarde [head of the International Monetary Fund], my heroes are academics. It is hard to just pick a few, but here are three: Georg Nöldeke, a young theorist at the University of Bonn during my time there, who inspired me to become an economist; Oliver Hart, a professor at Harvard, who would always listen to an interesting question; and David Laibson, who introduced me to behavioural economics at Harvard.
What is an average day at work?
It has become quite tricky to do what I love most – research. On a typical day, I fight hard to block out a few hours, but more often than not another duty takes over. I love a lot of these things – especially my role as a co-editor of the Journal of Economic Perspectives.
What would you do if you were dean for the day?
Try to find my successor. Seriously, I have been talking to deans of different schools more than usual recently, and they have such a tough job trying to balance competing interests, improve the reputation of the school and find funding.
What is the best piece of advice given to you by a teacher?
“What’s your research question, in just one sentence? If you can’t say it in one sentence, you don’t have a research question.”
What advice would you give to women in business?
They should probably give advice to me. When I read about the difficulties women face in business, I am just immensely grateful for the flexibility and support academia offers. But one thing that has worked for me is the good old “just be yourself”. It does guarantee that you do what you want to do and what you are passionate about.
How do you deal with male-dominated environments?
Awareness of constraints I face as a woman has played more of a role as I have climbed higher up the academic ladder, while trying to juggle a family with three young boys under the age of five. I now find it more important than ever to have senior female role models.
What is the last book you read?
Growing up with Three Languages by Xiao-lei Wang. My Italian husband and I have had a great experience teaching our kids our native languages and English, but we are not quite sure about the optimal course of action to take once they enter school, so I am consuming a lot on that topic right now.
What is your favourite book about business?
Being a behavioural economist, I am intrigued by things that go wrong, since it often gives me the clue to behavioural biases at work. Good to Great and How the Mighty Fall by Jim Collins gave me the real-world examples I needed for several of my research projects.
What is your top tip for students studying for a career in finance?
If you are planning to work on the technical side (for example, as a quant), get the best and hardest technical training you can, at least an MFE (master of financial engineering). If you are interested in a career in finance more broadly, sample a broad set of courses, from investments over to corporate and entrepreneurial finance – and even behavioural finance if offered at your school. But, most importantly, become a good economist. A big part of the problems causing the financial crisis was due to top managers in financial firms not understanding the economics of the products they were selling – for example, the incentive misalignment of lower-level employees or the adverse selection of customers for certain types of mortgages and mortgage repackaging.
What is your plan B?
It’s a question I don’t really have to think about as a tenured professor, but I admit that I have started to think more about how to put some of the insights from behavioural economics into practice. If there were efficient ways to be engaged in German policy for a limited time, as happens in the US – for example working for the president’s Council of Economic Advisers – I’d be interested. Unfortunately, the German system of research/politics interaction is less fluid, so far.
Expert views What is your top tip for finance students?
I would encourage students interested in finance to gather as much information as they can about the specific career path they are interested in, and focus on polishing their accounting, finance and financial statement analysis skills. It is also very important to stay informed on current events in the business world by reading the top finance newspapers, and to connect with alumni and professional networks to cultivate relationships that can help in the job search process.
Pay attention to economics. Whether you pursue a career in banking, asset management or corporate finance, economics provides the principles of price determination in any market – of how incentives work to reach those equilibrium prices.
It also offers a framework for strategic interaction. Even if the crisis has shattered the reputation of economics, it has also proved that finance needs more of it. For instance, we need to better understand asset bubbles, how the markets for all asset classes affect the economy as a whole, or how liquidity concerns in one asset class can cascade through other markets.
It is crucial to learn the theoretical basics and academic approaches on a broad range of topics, rather than specialising too early. Finance is not just investment banking. From doing an apprenticeship in a bank, I made a move into equity capital markets and mergers and acquisitions. Later, I continued in development finance, and my team is currently focusing on climate finance. My broad theoretical education in economics helped me to do this. It is always good to look at the broader picture – politics, international relations, cultural aspects and so on – to get a better sense of your ambitions.
Finance is a relationship-driven industry. Although financial transactions are often agreed after complex analysis and hard-nosed bargaining, it is the softer skill of forming affinities that determines long-term success in the industry. We help students understand the impact they have on others, and encourage them to develop and maintain a professional network. So my advice would to be make the most of your people skills, and remember that while your IQ might get you your job, it will be your emotional intelligence – or EQ – that ensures your success.
For more on women in business education go to www.ft.com/business-education/women