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PhD Dissertation Defense, Tianhao Yao, Finance

Congratulations to Dr Tianhao Yao, Finance, who successfully defended his doctoral dissertation at HEC Paris on June 6, 2023. Tianhao has accepted a position as Assistant Professor at Singapore Management University (SMU) starting in July. 

Specialization: Finance

Topic: Sustainable Finance and Asset Management 

Supervisor: Augustin Landier, Professor, HEC Paris 

Jury Members:

  • François Derrien, Professor, HEC Paris 
  • Alberta Di Giuli, Professor, ESCP Business School
  • Sébastien Pouget, Professor, Université Toulouse 1 Capitole
  • Paul Smeets, Professor, University of Amsterdam 
  • Daniel Schmidt, Associate Professor, HEC Paris, Co-Supervisor
  • Augustin Landier, Professor, HEC Paris, Supervisor

Abstract: 
The thesis contains three essays. In the first essay, I investigate whether ESG environmental, social and governance) education promotes ESG awareness and affects job choices. Exploiting the radual introduction of mandatory ESG courses in MBA curricula, I find that students who have taken mandatory ESG courses change their careers to work at firms with better ESG performance and in more sustainable sectors. School-level wages decrease after the introduction of mandatory ESG courses. Graduates with ESG education are more likely to state ESG concerns on their CVs, and are less (more) likely to leave better (worse) ESG-performing companies. My results imply that ESG teaching affects how students trade off pecuniary benefits and externalities, and thereby affects the matching between employees and firms. In the second essay, I investigate how sell-side analysts adjust their earnings forecasts following negative ESG incidents. I find that after learning about negative ESG news, analysts significantly downgrade their earnings forecasts over all horizons, including long-term horizons. Negative ESG incidents affect earnings forecasts at longer horizons than other types of corporate incidents. The negative revisions of earnings forecasts reflect expectations of lower future sales (rather than higher future costs). Forecast revisions explain most of the negative impacts of ESG incidents on firm value. In the third essay, I study product differentiation in the mutual fund industry. I design a model in which funds with heterogeneous perceived quality can choose their level of product differentiation. In equilibrium, high quality funds choose broad market designs appealing to many investors, while low quality funds adopt niche designs that investors either love or loath. Using as a measure of fund differentiation the degree of textual uniqueness of investment strategy description in fund prospectuses, I confirm empirically that funds with lower expected performance tend to differentiate more. I use the issuance of Morningstar rating as an exogenous shock to perceived quality to show the effect is causal.

Key words: Sustainable Finance, ESG, Mututal Funds.

Learn more about Tianhao on his personal website