Sabrine Ayed Wins Best PhD Thesis Award 2021 at ANACOFI

Assistant Professor Sabrine Ayed has received 2021 Best Ph.D. Thesis Award from ANACOFI, the leading French representative association for IFAs. Her work focuses on the relationship between Corporate Social Responsibility and Market Efficiency.

Sabrine Ayed is an Assistant Professor of Finance at EMLV and a member of the Finance Group at De Vinci Research Center. Her Ph.D. thesis brings new insights to the CSR literature by furthering our knowledge of CSR activities’ different financial market implications and extends the literature on market efficiency.

ANACOFI Ph.D. Thesis Award distinguishes brilliant work of students who have made the most outstanding contributions in one of the following fields: wealth management, finance, business development consulting and environmental, social and good governance.

CSR: focus on mispricing and behavioral finance

In this Ph.D. Thesis, the EMLV Assistant Professor challenges previous studies supporting the positive implications of CSR. Moreover, her work is the first research that attempted to introduce CSR in a mispricing framework. 

“A single approach cannot measure CSR actions, and numerous research studies show the relationship between CSR and firm value is variable, non-linear, and complex.

Regarding the impact of CSR on firm value, truth seems to be maneuvered rather than found, as CSR information is distorted and difficult to interpret (…) CSR generates mispricing because not all market information about CSR actions is equal in terms of information value. Some of it is entirely irrelevant and could be considered as “noise”, explains Sabrine.

Additionally, she explores the relationship between CSR and mispricing in depth by focusing on the two primary sources of mispricing suggested by the Behavioral Finance theory: investor sentiment and limits to arbitrage. 

Using a large sample of U.S. firms (S&P 500) from 2002 to 2017, Sabrine Ayed was able to question the reasonableness of the homo economicus assumptions underlying the Efficient Market Hypothesis.

Thus she added to the behavioral finance theory by recognizing that investors are not “rational”, but “normal” and that systematic biases in their beliefs induce them to trade on information unrelated to fundamentals. Then, she suggests a new factor that makes arbitrage harder and riskier. 

Some of the practical considerations that Sabrine suggests highlight the need to make the CSR concept more understandable and less complex. Socially responsible investors need to standardize the appropriate and adequate criteria that reflect actual CSR actions while measuring companies’ sustainability performance.