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UNITED STATES
US: Chicago business school receives record donation
The University of Chicago Graduate School of Business is no more: in its place is the University of Chicago Booth School of Business. The change of name for the globally top-ranking institution is in honour of entrepreneur and alumnus David G Booth who made a record donation to the school where he learned the finance principles on which he built his fortune.

This unrestricted donation by Booth - chairman and chief executive officer of investment firm Dimensional Fund Advisors - is the biggest individual gift made to a US business school. The combination of the initial payment, the income stream and equity interest, is valued at US$300 million.

Booth, who graduated with an MBA from Chicago in 1971, said the very first course he took at the school was taught by Professor Eugene Fama "and it was a life-changing event for me". Booth continued at the school as a PhD student and research assistant to Fama then, in 1981, he created Dimensional Fund Advisors in Santa Monica, California, where he applied Fama's principles.

These are based on the Efficient Market Hypothesis, formulated by Fama who is Robert P. McCormick Distinguished Service Professor of Finance. The theory holds that in a market with many informed and intelligent investors, securities are efficiently or fairly priced reflecting all available information, and the market offers no hidden signs. Active management, also known as stock-picking, cannot systematically outperform the market and generate higher returns over the long term without exposure to higher risk. Therefore, investors do better by buying and holding highly diversified portfolios.

Chicago Booth, which this month led BusinessWeek's US business school rankings, plans to use its windfall in a number of ways, such as attracting star faculty and expanding its international presence.

"We currently have campuses in Singapore and London, and we are looking to build centres in key geographical areas - exploring possible cities in the Middle East, Africa, South America, East and Central Europe, India, China," Arnold Longboy, director of education and student recruitment in Europe, told University World News.

The centres would offer non-degree executive courses, such as five-day programmes taught by Chicago faculty on such subjects as how to handle emerging markets, strategic leadership and finance, said Longboy. The long-term plan would be to coordinate with other Chicago University faculties in terms of their expansion plans.

The announcement of the Booth Family Trust donation was made as the global financial crisis stuck, raising fears in many universities that this will dry up donations. "This gift has come at the best time," said Longboy. "We will get additional funds for our initiatives and it provides a clear signal we are in business and we have funds for the long term. It can only mean a bright future for Chicago Booth."

www.chicagogsb.edu
jane.marshall@uw-news.com
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