The University of Chicago Graduate School of Business has announced a $300 million gift from alumnus David Booth and his family, the largest gift ever to the university and the largest to any business school in the world.

The gift, which will take the form of an up-front payment, a regular income stream, and equity interest, will enable the renamed University of Chicago Booth School of Business to aggressively recruit and retain top faculty. Other uses under consideration include developing new faculty groups in academic areas not normally associated with business schools, expanding existing research centers, and launching programs to better leverage the school's intellectual capital. The gift may also be used to support expansion of the school's international presence beyond its campuses in London and Singapore.

Booth, who received an MBA from the school in 1971, based the investment philosophy of his company, Dimensional Fund Advisors, on the efficient market hypothesis, a theory established by his former Chicago professor Eugene Fama, who posited that equity investors should not be able to beat the market since there is no way for them to know something about a stock that is not already reflected in its price. Instead, market efficiency suggests that investors are better off buying and holding widely diversified portfolios — the basic thinking behind index funds.

"I remember Professor Fama standing up the first day of class and saying 'This is the most practical course you will ever take,' and it turned out to be true," said Booth. "We built Dimensional Fund Advisors around his set of ideas. I am hoping that others will join me in giving back to this amazing business school."