July 2, 2002
Contact: Catherine Walsh
Harvard Business School
(617) 495-6931
Pearson Hunt, Retired Harvard Business School Professor and Authority on Corporate Finance, Dead at 93
BOSTON -- Former Harvard Business School (HBS) Professor Pearson Hunt, an authority on corporate finance whose research helped shape modern financial management practices, died Sunday (June 30, 2002) at Mt. Auburn Hospital in Cambridge, Mass. An advocate for improving the teaching and learning processes in business schools worldwide, Hunt was 93. The cause of death was a heart attack, according to his wife, Dr. Edna Homa.
The Edmund Cogswell Converse Professor of Finance and Banking, Emeritus, Hunt was "a pioneering scholar and teacher," says HBS professor emeritus Samuel L. Hayes III. "His work on the interconnections between a firm's free cash flow and its strategic options led to a new approach to assessing and valuing a business."
Hunt loved teaching finance concepts as much as researching them, says HBS professor emeritus Charles M. Williams. "Pearson Hunt taught with consummate skill at Harvard Business School for 35 years and then at several other schools during his 'retirement.' He influenced a generation of finance professors who went on to do great things in their own careers
Hunt was one of the first to bring to the attention of the academic community the problems related to the management of working capital, and to make constructive contributions toward analyzing and solving them more effectively. He also contributed to the theory of capital budgeting and to the development of a more realistic application of the cost of capital to investment decisions. In the midst of this work, Hunt coined the term E.B.I.T. (earnings before interest and taxes), a concept familiar to students of finance everywhere.
Groundbreaking research requires perseverance, Hunt believed. "The kind of courage an academic needs is to advance ideas before there is general acceptance that they are right," he once said. "You might be proven wrong. But it's great when you are proven right."
Hunt was born in 1908 and raised on Staten Island, New York. He did not formally attend school until the eleventh grade, when he entered the Lawrenceville School in Princeton, N.J. Instead his grandmother, a former teacher who lived with the family, tutored him. "I think some of my characteristics of looking at novel ways of doing things came from her," he said in an interview in 1983, upon receiving the HBS Distinguished Service Award, the highest honor the School can bestow upon a retired faculty member.
Hunt graduated magna cum laude and Phi Beta Kappa from Yale University in 1930, completed the first year at Columbia Law School, and then studied economics for a term at King's College, Cambridge University. After a cousin who was a student at Harvard Business School convinced him to enroll, Hunt earned an MBA with high distinction in 1933. Six years later he received a doctorate in commercial science - the precursor to today's doctorate in business administration (DBA) - from HBS.
Hunt liked to say that he had found his calling once he discovered Harvard Business School's hallmark case method, a teaching and learning experience rooted in in-depth discussions of real-life situations in the business world. "I was always a missionary for the case method," he wrote in a 1995 memo about how he wanted to be remembered after his death.
Named an assistant professor at HBS in 1940, he became a full professor a decade later. During World War II, he served as an instructor at the Army Air Forces Statistical Control School on the HBS campus, as well as a staff member in the Radiation Laboratory at MIT.
Although Harvard Business School was his professional home from 1940 to 1975, Hunt also taught on five continents during his HBS tenure and after his retirement from the School. He liked to say that he had "two strings to my bow" - his passion for finance and his passion for teaching.
Among his proudest accomplishments, said Hunt, were advocating modern management practices in post-war Europe and establishing an international teachers program that enabled several hundred young faculty from Europe and Latin America to visit American business schools for a year, including HBS. He also led management development programs in Britain, Canada, Chile, Guyana, Italy, Kenya, and Mexico.
Affectionately known by HBS students as "fearsome Pearson," due to a demanding presence in the classroom and persistent questioning of anyone who was off the point of a discussion, Hunt believed that teachers have an obligation to grow intellectually and admit when they are wrong. "It takes courage to get up in front of a group and say, 'I used to think so and so, but I don't anymore.' But say it you must," he said.
Hunt also urged teachers to make a subtle but important shift in their thinking about what it is that they do. "The statement, 'We must learn how to teach,' if thought through carefully, must be revised to 'We must learn how people learn.' If one has done this, even imperfectly, he will be a teacher."
The author or coauthor of numerous books and articles, Hunt wrote Basic Business Finance in 1958 with HBS professors Charles M. Williams and Gordon Donaldson; more than 300 universities used the text in their finance courses. Hunt's 1966 Harvard Business Review article, "The Fallacy of the One Big Brain," was one of the first major treatments of corporate decentralization. "A company that denies the planning dimension of work to the lower levels of management obtains what it deserves - [people] who, when promoted, are not able to plan ahead."
Much of Hunt's writing urged corporate managers to adopt a different way of organizing financial information. "The funds position is the keystone of a company's financial structure," he wrote in a 1975 Harvard Business Review article. "With it firmly in place, financial planners can correctly analyze the results of their company's operating and investment policies; it is the single figure that can safely support their financial planning."
After retiring from HBS in 1975, Hunt taught at the University of Massachusetts in Boston, helping the new school develop its business program. In a letter reappointing Hunt to the faculty after his first year, Dean Richard Freeland wrote: "No one has given more thought to every aspect of the college's development; no one has thought more seriously about our work in the classroom, in organizing the program; no one has shown greater willingness to expose ego and feelings to the sometimes tumultuous process of college-building… It has been a joy to witness and share."
When he and his wife began spending their winters in Winter Park, Florida, away from the cold of Cambridge, Massachusetts, where they lived the rest of the year, Hunt made sure he had a classroom to go to by teaching at nearby Rollins College.
Besides his work, Hunt especially enjoyed music, art, and theater. With eclectic tastes that ranged from chamber ensembles to twentieth-century compositions and from Renaissance Italian art to modern works, he attended numerous concerts, dance recitals, theatrical performances, and art exhibits. "We'd frequently go to Music Mountain in Connecticut to attend a jazz concert one day and a classical concert the next," said Dr. Homa, Hunt's wife of almost forty years, in an interview yesterday. Another favorite destination was the Jacob's Pillow Dance Festival in the Berkshires of western Massachusetts.
In addition to his wife (the first woman to receive a DBA from Harvard Business School), Hunt is survived by his son, David, of Springfield, VT; two daughters, Merrill Tikalsky of Williston, N.D., and Lucy Grant of Exeter, England; and four grandsons.
No funeral service is planned. A memorial service will be held in the fall. In lieu of flowers, donations in Professor Hunt's memory can be sent to the American Friends Service Committee, 1501 Cherry St., Philadelphia, Pa. 19102 and Doctors Without Borders USA, P.O. Box 1856, Merrifield, Va. 22116-8056.