Ramesh K.S. Rao

Ramesh K.S. Rao

Academic Affiliate

Email: Contact Jeffrey S. Andrien

Phone: (512) 703-4600 VCard View CV


Ramesh K.S. Rao is the Eugene and Margaret McDermott Professor of Finance at the University of Texas at Austin, where he teaches graduate and executive level classes in finance. Ramesh’s research focuses on corporate finance, investments, and international finance/economics. He is also an expert in the asset pricing field. His articles have been published in the leading academic journals, including the Journal of Financial Economics, the American Economic Review, the International Journal of Financial Education and the Journal of Financial and Quantitative Analysis. He is also the author of four books: A Theory of the Firm’s Cost of Capital; Financial Management Concepts and Applications; Fundamentals of Financial Management; and Airport Management Handbook.

His recent consulting experience includes work with Fidelity Investments, Cunningham Communications, Enron, U.S. Federal Bankruptcy Court, Burlington Northern, Intel Corporation, Arthur Young, Baker and Botts, and Deutsche Bank.

Ramesh has a B. Tech. from the Indian Institute of Technology in Madras, and an M.B.A. and D.B.A. from Indiana University.


D.B.A., Finance, Indiana University, 1978
M.B.A., Indiana University, 1977
B. Tech., Metallurgical Engineering, Indian Institute of Technology, Madras, 1974

Areas of expertise

Recent news, presentations, and publications

“Shareholders’ Wealth-Maximizing Opearating Decisions and Risk Management Practices in a Mixed Contracts Economy” with G. Gutierrez, forthcoming, Production and Operations Management, 2010.

“Marketing Initiatives, Expected Cash Flows, and Shareholders’ Wealth,” with N. Bharadwaj, Journal of Marketing, January 2008.

A Theory of the Firm’s Cost of Capital:  How Debt Affects the Firm’s Risk, Value, Tax Rate, and the Government’s Tax Claim, with Eric Stevens.  World Scientific Publishing Company, 2007

“The Firm’s Cost of Capital, Its Effective Marginal Tax Rate, and the Value of the Government’s Tax Claim,” with E. Stevens.  Berkeley Electronic Journals: Topics in Economic Analysis & Policy, 2006, Vol. 6, No. 1, Article 3.

“Sulfur Dioxide Allowances: The Price of Pollution,” with S. White.  Journal of Financial Education, 2005.  This article is also in the ICFAI Journal of Environmental Law.

“The Creation of First City Financial Corporation:  A Clinical Study of the Bankruptcy Process,”  with S. White. International Journal of Financial Education.  This article is also published in Principles of Corporate Renewal Casebook, H.D. Platt and M.B. Platt, eds., University of Michigan Press.

“Bid-ask Spreads, Informed Investors, and the Firm’s Financial Condition,” with V. Agrawal, M. Kothare, and P. Wadhwa.  The Quarterly Review of Economics and Finance, Vol. 44, 2004, pp. 58-76.

“The Effect of Deteriorating Financial Performance on Director Liability,” with D. Sokolow and D. White.  Directorship, Vol. 33, No.1, January 1997.

“Fiduciary Duty a la Lyonnais: An Economic Perspective on Corporate Governance in a Financially Distressed Firm,”  with D.S. Sokolow and D. White,  Journal of Corporation Law, Vol. 22, No. 1, fall 1996.

“The Dividend Payouts of Private Firms:  Evidence from Tax Court Records,” with S. White, Journal of Financial Research, Vol. 17, winter 1994.

“Shareholder Wealth Effects of Liability Limitation Provisions,” with Yaron Brook, Journal of Financial and Quantitative Analysis, September 1994.

“Does Limiting Directors’ Liability Affect Stock Prices?”  with Y. Brook,  Directorship, April 1994.

“Subsidization among S&Ls under the Flat Rate Deposit Insurance System:  Some Empirical Estimates,” with A. Burnett and Seha Tinic. Journal of Financial Services Research, 1991.

“Predicting Stock Returns from Option Pricing Models: An Exploratory Investigation,” with E. Ancel.   Journal of Financial Research, 1990.

“Estimation Risk and Adaptive Behavior in the Pricing of Options,” with C.B. Barry and D.W. French, Financial Review, 1990.

“Asset Pricing in a Generalized Mean-Lower Partial Moment Framework: Theory and Evidence,”  with Van Harlow,  Journal of Financial and Quantitative Analysis, Vol. 24, No. 3, September 1989.

“Mean-Generalized Coefficient of Variation Analysis and Expected Utility Maximization.”  With G. Boyle.  Southern Economics Journal, July 1988.

“Mean-Lower Partial Moment Valuation with Lognormally Distributed Returns.”  With W.Y. Lee. Management Science, April 1988.

“Adverse Selection as an Explanation of Credit Rationing and Different Lender Types.”  With J. Finkelstein, W.Y. Lee, and R. Chiang.  Journal of Macroeconomics, Vol. 6, No. 2, spring 1984.

“Determinants of the Foreign Exchange Bias:  A New Methodology.”  With S.D. Smith.  Current Economic and Financial Issues of the North American and Caribbean Countries, 1983.

“The Impact of Yield Changes on the Systematic Risk of Bonds,” Journal of Financial and Quantitative Analysis, March 1982.

“Option Pricing in a Lognormal Securities Market with Discrete Trading.”  With W.Y. Lee and J.F.G. Auchmuty.  Journal of Financial Economics, 1981.

“Modern Option Pricing Models:  A Dichotomous Classification,” Journal of Financial Research, spring 1981.

“The Currency of Denomination of International Trade Contracts.”  With S.P. Magee.  Exchange Risk and Exposure: Current Developments in International Financial Management, R.M. Levich and C.G. Wihlborg, eds., D.C. Health & Co. 1980.

“Vehicle and Non-Vehicle Currencies in International Trade.”  With S.P. Magee.  American Economic Review, May 1980.

“Risk-Neutral and Non Risk-Neutral Call Option Prices:  A Synthesis,” Proceedings of the Southwestern Finance Association, March 1978.

“Another Look at the Use of Options Pricing Theory to Evaluate Real Asset Investment Opportunities,” with J. Martin.  Journal of Business Finance & Accounting, 1981, Vol. 8, No. 3.

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