Professor of Finance Ser-Huang Poon explains the background to an unprecedented Alliance MBS study into financial markets.
We are genuinely excited about our three-year Alliance-funded project which brings together a dozen research academics in our Accounting and Finance division to research new developments in financial markets and the asset management industry.
These are extraordinary times in the global finance industry which is undergoing rapid change as new investor models take hold. For instance, this is epitomised by the staggering rise of the hedge fund industry and a particular feature of our project will be the construction and merger of several hedge and mutual fund databases, together with management bibliography information and corporate information.
We have also purchased Ravenpack news sentiment data which allows detailed analysis into the microstructure of market trading. The scale of this database amalgamation is unprecedented and will allow us to address research questions in multi-dimensional aspects that were not previously possible.
Gender diversity
One area of research focus will be looking at whether investment funds managed and owned by women perform differently to those run by men. Are these funds more ethical? Do they lead to better governance in the companies in which the funds invest?
In this regard we are working with State Street Global Advisors (SSGA), one of the world’s largest asset managers, which recently launched a Gender Diversity Index which lists those large US companies which have the highest levels of gender diversity on their boards and senior management.
Aside from gender issues, SSGA will also be working with us on a wide range of research topics related to the enhanced influence that institutional investors exert on corporate decisions, such as:
*M&A (Mergers & Acquisitions) activity
*Financial innovations characterized by the emergence of new asset classes, often with poorly understood risks such as various types of complex derivative instruments
*New classes of institutional participants, such as high frequency traders, whose impact on financial markets is potentially controversial
*Globalisation and the increasing interdependence between financial markets and the real sector of the economy, which may lead to non‐negligible systemic risks.
As Richard Lacaille, Executive Vice President and Global Chief Investment Officer at SSGA, says: “We are providing research support and guidance to Alliance MBS, and other assistance that will ensure the project is not just successful from an academic research point of view, but also of use to the fund industry itself.”
Citations
Four research papers have so far been produced by our team. One paper by George Wang 100 years of stock returns momentum has been widely cited, while a paper How risky are low risk hedge funds? by Olga Kolokolova appeared in a special issue on hedge funds recently published by the Banque de France.
Another paper Institutional Investment Horizons and Labor Investment Efficiency by Viet Anh Dang and Konstantinos Stathopoulos was nominated for the best paper award at a recent Financial Management Association meeting in the US.
Engagement
We want to engage with the business world as much as possible throughout our project so that we can both disseminate our research findings and receive invaluable input into our studies. To that end we will be hosting a number of conferences and workshops, starting in late Spring 2017. For further details do please contact me at ser-huang.poon@manchester.ac.uk