Research @ HEC Liège


Research @ HEC Liege

Financial Management for the Future (FM4F)

The Financial Management for the Future (FM4F) group devotes its research agenda to issues that are relevant to the economic evolution at two main levels:

  • asset and risk management,
  • corporate finance.

In this article, we invite you to discover the latest news of this research field.


A new method for analyzing extreme financial events that can help design risk management policies

Prof. Julien Hambuckers and Thomas Kneib (University of Göttingen) published recently a new statistical method that allows the analysis of extreme financial events collected over times of structural instabilities, like repeated financial crises or regulatory changes. Thanks to the introduction of a so-called smooth-transition structure, the analyst can specify a variable responsible for these instabilities and let the data determines how it affects the link between the extreme events and macro-financial factors. They show that, applied to the analysis of extreme operational losses in banks (e.g. losses stemming from human errors), this method is superior to its competitors to determine capital buffers. These results give important insights to financial regulators for the design of optimal risk management policies. The article will appear soon on the Journal of Financial Econometrics and is available via ORBI here.


Upcoming publications from our new assistant Professor

Prof. Wouter Torsin joined the “Financial Management for the Future” (FM4F) team this academic year. His work has resulted in several forthcoming publications. Here are some of the main highlights:

Alongside James Thewissen (UC Louvain) and Özgür Arslan-Ayaydin (University of Illinois at Chicago) their research has found that managers strategically manipulate the content of financial disclosure downwards in the presence of labor unions. This work builds to the notion that corporate communication arises from the tension between internal labor demands and those of the shareholders. The paper will be published in the Journal of Business Finance and Accounting and can be accessed here.

Another upcoming paper, alongside Beibei Yan (Shanghai University), sheds light that managers with more capacity in generating corporate performance rely less on strategic sentiment inflation relative to younger and less experienced managers. This again confirms the notion that financial disclosure is not only used as a tool to inform investors, but is also composed to serve managerial self-serving purposes. The paper will be published in the Asian Review of Accounting and can be read here.

Finally, in collaboration with Prabal Shrestha (KU Leuven), Prof. Torsin has documented that, in the nascent market of initial coin offerings, investors are particularly susceptible to behavioral investing. In that sense, they document that ICOs stemming from countries in which there exist stronger institutions and laws raise a substantially higher amount during the token offering periods, even though such institutions do not safeguard ICO investments. To discover more about this paper, forthcoming in the International Review of Economics and Finance, please visit ORBI.


Research projects in Sustainable Finance

The FM4F research team has launched some promising research projects in the field of sustainable finance.

Prof. Marie Lambert, with our PhD candidate Nicolas Moreno and Prof. Ludovic Phalippou (Oxford University, Head of the Finance, Accounting and Economics research group) will release soon a working paper on the (negative) impact of private equity on employee welfare.

At the same time, Prof. Lambert with Jérôme Ruth (PhD candidate) and Prof. Luc Renneboog (Tilburg University) are working jointly on the disagreement among ESG (Environment – Social – Governance) rating providers, examining important issues on the quality of sustainable information raised by the European Commission.

In collaboration with the HEC Liège spin-off Zeno, Prof. Georges Hübner and Célina Thonus (PhD candidate) are studying the influence of the actual shareholders’ decision power, measured through their “Zeno index” (based on game theory), on the corporate ESG indicators. This may improve our understanding of the role of agency relationships on corporate strategy regarding the sustainability of their activities.


Towards the creation of a new spin-off in the field of asset management

Fourteen years after the creation of Gambit Financial Solutions (2007), a new spin-off, called Sopiad, is under way towards an ambitious journey. Sopiad aims to commercialize a revolutionary rating system for financial portfolios called SAFIR (Synthetic Adequacy Fund-Investor Rating), based on the research produced in the team of Prof. Georges Hübner and fueled by the experience acquired by Gambit, who will become an important development and commercial partner.

Sopiad has benefited from a First Spin-Off (FSO) grant from the Walloon Region in order to prepare the creation of the company in the best condition. Together with the FSO researcher, Simon Taquet, who will become COO, Sopiad will be managed by Pierre Nemeth, alumni of HEC Liège. The Research and Development of the company will be headed by Cédric Gillain, who is in the final phase of his PhD co-promoted by Prof. Marie Lambert and Prof. Ashwin Ittoo, and with the support of Philippe Cogneau, who obtained his PhD with Prof. Hübner. Amongst others, the company aims to develop an innovative system for the detection of persistence in mutual fund performance, and to actively use ESG (Environment – Social – Governance) indicators in order to refine the investors’ profiles and the assessment of the suitability of portfolios for the wealth and asset management industries.


New PhD grants

FM4F has been awarded two PhD grants by the research council in human sciences out of the 10 selected applications.

Romain Crucil, supervised by Prof. Julien Hambuckers for his project entitled “Unconventional monetary policy and high-order dynamics in financial uncertainty”. The goal of this project is to understand the effects of repurchase programs of non-conventional assets by central banks on the uncertainty of the financial markets. This question is crucial for central banks and governments since an increase in financial uncertainty has been shown to have strong negative effects on the investment and consumption behaviors of economic agents. This work will help central banks in implementing effective monetary policies when interest rates are extremely low, like the current COVID crisis.

The doctoral project of Jérôme Ruth, supervised by Prof. Marie Lambert studies three conditions facilitating the allocation of individual agents’ capital to sustainable projects. A first condition is that these agents are consistent in their investment approach and allocate their capital to financial products according to their sustainable motives. A second condition is that financial intermediaries who act on behalf of those agents are able to significantly influence firms' externalities (i.e. impacts of firms on individuals which are not under individuals’ control). However, to select sustainable investments and monitor firm’s sustainable performance, a third necessary condition relies on the access to “true” sustainable information on investments and firms.