Growing up in a small village in the French Alps, Sébastien Michenaud had a childhood light years away from the business world. The son of an elevator repairman and a stay-at-home mother, Michenaud often yearned for something beyond his rural existence. 

“I come from a family background that is totally removed from finance and business,” says Michenaud. “Neither of my parents even graduated from high school.”

But Michenaud transcended this humble up bringing to graduate from one of the top business programs in the world, HEC Paris.

He then landed positions as a business analyst and management consultant in the lucrative mergers and acquisitions market. Michenaud was well invested in his finance career when, suddenly, he had a feeling something was missing.

“I realized I had fulfilled my need to be monetarily successful, but I was looking for a sense of purpose. I figured out it had to be more than just making money,” says Michenaud.

The finance careerist decided he wanted to teach and went on to get his PhD from HEC Paris and Swiss Finance Institute. It was the academic research requirement for his doctoral studies that led him back to groundbreaking work in the world of finance.

Professor Gains Awards for Teaching and Research

Since then Michenaud has done award-winning research and has written about diverse topics such as the how sell-side equity analysts affect corporate decision-making and the design of incentive contracts for CEOs. His most recent work looks at the effects of short selling on the financial markets.

In “The Real Effects of Short Selling Constraints,” published this year in The Review of Financial Studies, Michenaud and his colleagues examined how lifting a ban on short selling affected firms’ stock prices and investment.

Michenaud’s research looked at causality within the financial markets using a rarity—a randomized experiment designed for the entire US stock market. In this case, there was a random group of companies that were affected by the ban on short selling while the rest of the US listed firms were not.

The researchers could study the effects on the stock prices of companies that were under the short-selling ban and compare them to those of companies that were exempt from the ban.

“It’s very difficult to discover the causal effects of financial markets,” says Michenaud. “We were able to show that the shock to the stock prices in our sample of stocks were not caused by anything else but the removal of the short-selling constraints.”

Academic Research Enriches Student Success

Such research may seem purely academic, but Michenaud says students can benefit greatly from it.

“Having teachers who understand current research and are at the forefront of it is invaluable to students in that it gives them access to this new knowledge before anyone else synthesizes it in future textbooks,” says Michenaud. 

For example, Michenaud says that a former MBA student used recent research in asset pricing to start his hedge fund. Another student used research on sell-side equity research analyst bias to better understand forecasting and outperform his competition.

Michenaud hopes to inspire DePaul finance students in a similar way as he delves deeper into his two passions: teaching and research.

“As academics, we are building new knowledge and evaluating the advancement of knowledge in the profession that will be used in the textbooks of the future,” says Michenaud.


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