PhD Spotlight – Renato Lazo Paz
Renato Lazo Paz is a Ph.D. candidate in the Finance specialization working under the supervision of Professor Fabio Moneta. His current research interests center around institutional investors, empirical asset pricing, and behavioral finance. His prior research has focused on topics such as the mutual fund flow-performance relation in emerging markets, the relation between fixed-income funds and the real economy, and the behavioral determinants of capital structure decisions.
We interviewed Renato to learn more about his research interests.
Why did you choose to study finance at Telfer?
After finishing my undergraduate studies in Industrial Engineering, I started working as a Financial Consultant and Buy-side analyst at a small consulting firm in Peru. However, my daily work left me with more questions than answers. That is when I knew I wanted to start a career in academic finance.
What is your research about and what will it contribute to academic literature?
In my doctoral thesis, I explore aspects related to empirical asset pricing and institutional investors (e.g., mutual funds, Hedge funds). I hypothesize that mispricing can arise and persist due to trading activity by such investors. Moreover, I analyze if this effect is an unintended consequence of trading on popular investment strategies. My research aims to contribute to the current discussion on institutional investors' role in financial markets' stability and efficiency.
You recently presented research at several conferences. What are the highlights?
The first chapter of my doctoral thesis, co-authored with professors Fabio Moneta and Ludwig Chincarini, has been presented at several finance conferences. This paper shows that crowded trading positions, in which many investors hold the same securities, pose additional risks to investors due to concerns of sudden price declines when facing challenging market conditions. This situation may limit price correction, reducing market efficiency.
What impact could your research have in financial markets?
A growing concern in financial markets is the dominant role that institutional investors have in capital markets. This situation led to increased ownership concentration in a few investors, which posed new challenges to overall market efficiency. My thesis analyzes how this phenomenon creates additional risk concerns for investors. My objective is to provide investors with information that helps them forecast increasingly risky positions to help them reduce the negative impact of worsening market conditions.