Adam Smith Conference in Finance on HEC Paris Campus
The Adam Smith Workshops were hosted for the first time by HEC Paris on March 17-18, 2017. It brought together distinguished scholars from around the world to present and discuss recent research in all areas of financial economics. The Adam Smith Workshops are a regular event organized jointly by HEC Paris, Imperial College Business School, London Business School, London School of Economics, and Oxford University’s Saïd Business School.
The conference was attended by some 130 participants, both senior academics and doctoral students from a wide variety of leading international schools and institutions (University of Chicago, MIT, LSE, Banque de France, etc.) This year, leading researchers in the field, including HEC Paris PhD graduate Jean-Noël Barrot from MIT, Pietro Veronesi (University of Chicago), or HEC Paris PhD graduate Bruno Biais from the Toulouse School of Economics presented their latest research as part of two parallel sessions on Asset Pricing and Corporate Finance. In total, the program included 18 academic papers on topics such as the evolution of banking in the knowledge economy, the rise of pay in the finance sector, the effect of imports from China on household debt, currency manipulations or the spillovers associated with corporate bankruptcies.
Read the Knowledge@HEC articles to get an easy-to-read glimpse of some impactful research of the workshop:
Free trade, household debt and the great recession
The rise of import from China in the 2000s’ led to a strong increase in American households’ debt, reveals a study written by Professors Jean-Noël Barrot, Erik Loualiche, Matthew Plosser and Julien Sauvagnat. This effect is mainly explained by manufacturing workers borrowing to smooth consumption after facing deteriorating labor market conditions. Import competition from China therefore has not only played a role in the dramatic drop in US manufacturing employment after 2000, but has also fueled the credit bubble that has ultimately led to the Great Recession.
The local effects of bankruptcy
What are the local impacts of firms being liquidated? In a new paper, Professors Bernstein, Colonnelli, Giroud and Iverson show that it negatively affects the activity of closely located firms, mainly through a reduction in consumer traffic and a decrease in knowledge spillover. As a consequence, judges should take into account those negative spillovers when deciding whether or not to liquidate a firm.
Do talents affect financial decisions?
Talented workers are the first to leave a firm in financial distress. Simultaneously, this makes recruiting new skilled workers much more difficult. Labor fragility is therefore a key determinant of a firm capital structure: CFOs assess the workforce risk associated with high leverage when deciding to issue debt or equity. This is especially true for companies relying on skilled labor.
The Adam Smith Workshops provided attendants with a wonderful opportunity to present their current work in progress, discuss others’ research, and more generally to meet, network and exchange with a high level set of academic peers all in the HEC Paris campus’ outstanding facilities.
The organizing committee included HEC Paris professors working at the Finance department: Denis Gromb, Professor of Finance – HEC Foundation Chair, and Christophe Spaenjers, Associate Professor of Finance.
