Finance Professor’s Article Wins Graham and Dodd Scroll Award
February 06, 2019
How do hedge funds affect stock prices? A paper published in the Financial Analysts Journal in December by a group of researchers that includes Isenberg’s Bing Liang finds that they exploit and help correct stock mispricing.
Titled “Hedge Funds and Stock Price Formation,” the paper won the 2018 Graham and Dodd Scroll Award from the CFA Institute, the global association of investment management professionals. Liang, the Charles P. McQuaid Professor of Finance and director of the school’s new Master of Finance in Alternative Investments, wrote the article with Charles Cao, Yong Chen, and William N. Goetzmann. “In comparison with other institutional investors like mutual funds, hedge funds tend to buy undervalued stocks,” Liang says. “Through trading, hedge funds not only make profits from these stocks but also reduce mispricing. Overall, they play a positive role in determining the correct stock prices.”
The Graham and Dodd (G&D) Awards are presented annually to recognize excellence in research and financial writing in the Financial Analysts Journal. Liang is a two-time winner, having previously won the organization’s top honor in 2009 for a paper in which he and his fellow researchers developed a qualitative model for measuring hedge fund operational risk, titled “Estimating Operational Risk for Hedge Funds: The ω-Score.”
“I’m very excited and honored to receive the 2018 Graham and Dodd Scroll Award, especially after getting the top G&D Award in 2009 with my coauthors!” Liang says.