Ten Questions - Laurie Hodrick

Laurie Simon Hodrick is a professor of finance and economics and the founding director of the Program for Financial Studies at Columbia Business School in the US. She is known for her ground-breaking research on corporate financial decisions, with a particular interest in share repurchases and dividends, takeovers and equity offerings. In recognition, she has received numerous awards for her research and teaching awards, including the National Science Foundation Presidential Young Investigator Award and the Columbia University Presidential Award for Outstanding Teaching.

Before joining the faculty of Columbia Business School in 1996, Prof Hodrick was at the Kellogg Graduate School of Management at Northwestern University, where she received the Teacher of the Year award. From 2006-2008, she was managing director and global head of alternative investment strategies at Deutsche Bank.

Prof Hodrick grew up in Philadelphia, where she attended an all-girls school. She graduated from Duke University in 1984 and received a PhD in economics from Stanford University in 1988. She now lives in Greenwich, Connecticut with her family and enjoys cooking, gardening, playing tennis and travelling.

1. What does it mean to be a professor?

I have come to realise that, rather than being a title or job description, for me being a professor is a way of life. Being a professor is not something I do, it is who I am. It is being driven by intellectual curiosity to create, translate and disseminate ideas. I am equally a professor when working at Columbia or when working as an investment banker. I am still honoured and thrilled when I step into an elevator and someone says “Good morning, professor.”

2. Who are your business influences?

My older brother, Scott Simon, is a managing director at Pimco, heading the mortgage- and asset-backed securities teams. He always set a high bar of excellence and always encouraged me to do whatever I wanted to do. When I would say something as a child, he would ask me, “Are you sure?” I now ask my students this same question, to help them discern between their opinions and what they know for sure.

3. What do you enjoy most about your job?

As a professor, I can redefine myself to guarantee that things never get boring or rote. I can redirect my research agenda in both methodology and area, I can revamp my curriculum and I can change the nature of the service that I provide to the school and the profession. This keeps things fresh and stimulating.

4. What is the best piece of advice given to you?

One of the best pieces of advice I have ever heard comes from the movie Hitch: “When you’re in the room, be in the room”. It is incredibly important to be engaged in everything you do.

5. What academic achievement are you most proud of?

For my research, I am most proud of receiving the National Science Foundation Presidential Young Investigator Award. This five-year, $500,000 grant, which I received early in my career, supported my research on the importance of shareholder heterogeneity for understanding corporate financial decisions, instruments and transactions.

For my teaching, I am most proud of receiving the Columbia University Presidential Award for Outstanding Teaching. My daughter, who was 12 at the time, attended the commencement exercise with my husband and thousands of others. She still remembers when the students, whom she refers to as ‘the blue people” because of their light blue caps and gowns, stood up and roared as my name was announced as the recipient. It helped her realise the importance of what I did when I wasn’t at home.

6. What is your biggest lesson learnt?

You can do everything you want to do and be everything you want to be, but not all at once.

7. What advice would you give to women in business?

I give the same advice to men and women. As Aristotle said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” I am a huge believer in deliberate practice, spending a lifetime preparing for a few key moments and that in those moments you need to already be excellent, not flip a switch to become excellent. Hence, I encourage people to be passionate about what they do. Always be timely, accurate and professional. Learn every day.

8. What is your favourite business book?

The Theory of the Leisure Class by Thorstein Veblen (1899). Veblen’s writings have spawned a significant body of research on status and social custom for over a century, inspiring my American Economic Review paper on conspicuous consumption, co-authored with Doug Bernheim.

9. If you could do it all again, what would you do differently?

Nothing. I am trained as an economic theorist to appreciate the important distinction between ex ante and ex post information sets. Ex ante, I have made the best decisions I could, knowing what I knew at the time, so I am comfortable with the choices I’ve made. For example, even though I had already moved significant assets out of stock, I didn’t sell all of my stock at the peak in October, 2007!

10. What is your life philosophy?

If you are blessed to wake up, each day is a new beginning.

Interview by Charlotte Clarke