INSEAD Professor of Finance Joel Peress, award-winning thought leader, will hold inaugural AXA-INSEAD Chair in Financial Market Risk
INSEAD, the prestigious international business school, has garnered a significant financial gift from AXA Research Fund, the scientific philanthropy initiative of global insurance group AXA. The gift, in the amount of €2 million, will establish the AXA Chair in Financial Market Risk at the school. INSEAD Associate Professor of Finance Joel Peress will occupy the new chair, an honour that recognises his thought leadership in his field.
“I am grateful to have been chosen to be the AXA-INSEAD Chair holder in Financial Market Risk and honoured to be recognised in this way,” said Professor Peress, whose accomplishments include twice winning the coveted Smith Breeden Prize, the annual award bestowed for the best paper published in The Journal of Finance, “This generous gift from AXA is an investment in INSEAD’s academic capacity and enables us to make additional contributions to the study of complex global financial markets.”
This new AXA-INSEAD Chair will support INSEAD’s strategic commitment to advancing its considerable finance expertise. In particular, the endowment will examine recent structural weaknesses in financial markets to produce insights that can help prevent future crises.
Today, interactions between the dissemination of information, market efficiency and financial risk remain poorly understood, notably because of a lack of comprehensive data allowing new theories to be tested. Professor Peress is addressing this critical gap through his research, which has been widely published in prestigious journals such asThe Journal of Finance, The Review of Financial Studies, The Journal of Portfolio Management and The Journal of Economic Theory.
Since the onset of the global financial crisis of 2008, financial markets and their risk-taking behavior have undergone increased scrutiny. However, evaluating this risk relies on information flow that has been greatly impacted by information technology developments, such as the Internet, electronic filings and social media. Experts continue to assess whether or not this deluge of information has improved financial decision-making.
“Technological advances are revolutionising the way financial markets acquire and process information,” said Professor Peress, whose innovative research includes examining how information is generated and circulated in financial markets. “Investors can now access vast quantities of data about companies cheaply. This development can help forecast economic trends and also level the playing field, allowing retail investors to learn market news without delay and to examine expert analyses.”
However, Professor Peress acknowledges that this information revolution is also creating challenges, notably inducing a “speed race” among competitors to gain milliseconds of advantage over their peers while making little or no apparently beneficial social contributions—and increasing the risk of making hasty mistakes. For example, said Professor Peress, investors might rush to react to news that may turn out to be false or inaccurate. Similarly, these investors may use computer algorithms that can run amok, thus adding to the market’s instability.
The role of the media in influencing markets is one that Peress finds “fascinating.” He says the evidence today shows that media reports can have both an immediate and delayed impact on markets. “This is especially the case when they reach investors who have limited access to news, or when the reports draw attention to specific events,” said the INSEAD professor. “More subtly, they may coordinate opinions among agents, informing investors about what other investors know. This type of knowledge is particularly important to short-horizon traders who care about the average opinion of the asset’s fundamental value. In such a context, the media, in selecting what to cover, may themselves become a source of risk.”
These and related avenues of research will be enhanced through the AXA Chair in Financial Risk.
Gerald Harlin, AXA Group Chief Financial Officer commented: “The ever-faster pace of information circulation and the financial system’s reactiveness to news and subsequent vulnerability to the unforeseen, have made the ability to forecast increasingly crucial in financial management. For all of these reasons, we are pleased to support the prestigious INSEAD Chair headed by Professor Peress. His impressive skills and innovative approach will contribute to a thriving research program and leverage INSEAD’s international network of excellence. It will also enhance understanding and contribute to the public debate in the field of financial market behavior.”
The AXA-INSEAD Chair becomes the newest investment in INSEAD thought leadership. It joins 35 of existing endowed faculty chairs at the school, each one recognising an acclaimed INSEAD scholar and helping to advance cutting-edge research in many different disciplines.
About the AXA Research Fund
The AXA Research Fund is the scientific philanthropy initiative of AXA. It aims to further understanding and management of today’s and tomorrow’s risks. Since its founding in 2007, the Fund has committed a total of EUR 100 million to more than 360 promising research projects at leading academic institutions in 27 countries around the world. The Fund undertakes long-term partnerships, focusing on research to contribute to the public debate and help manage or prevent risks to the environment, human life and societies.
For more information: www.axa-research.org
Twitter: @AXAResearchFund - #AXARFINSEAD
About the AXA Group
The AXA Group is a worldwide leader in insurance and asset management, with close to 160,000 employees serving 102 million clients in 57 countries. In 2012, IFRS revenues amounted to EUR 90.1 billion and IFRS underlying earnings to EUR 4.3 billion. AXA had EUR 1,116 billion in assets under management as of December 31, 2012. The AXA ordinary share is listed on compartment A of Euronext Paris under the ticker symbol CS (ISN FR 0000120628 – Bloomberg: CS FP – Reuters: AXAF.PA). AXA’s American Depository Share is also quoted on the OTC QX platform under the ticker symbol AXAHY. The AXA Group is included in the main international SRI indexes, such as Dow Jones Sustainability Index (DJSI) and FTSE4GOOD. It is a founding member of the UN Environment Programme’s Finance Initiative (UNEP FI) Principles for Sustainable Insurance and a signatory of the UN Principles for Responsible Investment.
