Saeid Hoseinzade
Contact
Information
Boston College
Carroll School of Management
Fulton Hall 335
140 Commonwealth Avenue
Research
Interests
Asset Management, Investments, Corporate Bonds, Liquidity
Education
Ph.D., Finance (Candidate, 2016)
Boston College, Carroll School of Management
Dissertation: "Essays in Asset Management and Corporate Bonds"
Committee:
Pierluigi Balduzzi (co-chair), Jonathan Reuter (co-chair)
Jeffrey Pontiff, Ronnie Sadka, Hassan Tehranian
Working
Papers
Email: hoseinza@bc.edu
Phone: +1 (774) 266-1452
https://www2.bc.edu/saeid-hoseinzade
2011-Present
Chestnut Hill, MA
M.Sc., Industrial Engineering and Operations Research
Sharif University of Technology
2007-2009
Tehran, Iran
B.Sc., Industrial Engineering and Operations Research
Sharif University of Technology
2003-2007
Tehran, Iran
"Do Bond Mutual Funds Destabilize the Corporate Bond Market?", Job Market Paper
Selected for presentation in:
• Liquidity Risk in Asset Management: Financial Stability Perspective Conference, Rotman School of
Management, U of Toronto, hosted by the Bank of Canada, September 2015
•
28th annual Australasian Finance and Banking Conference, Sydney, Australia, December 2015
•
Midwest Finance Association Annual Meeting, Atlanta, Georgia, March 2016
Bond mutual funds engagement in liquidity transformation and their rapid growth over the past several years have
created concerns about the threats they pose to corporate bond market stability. In this paper, I study the impact of
fund redemptions and resulting sell-offs on corporate bond yields. To control for unobserved changes in
fundamentals, I study within-issuer variation of yield changes, resulting from differential exposure to redemptions
and sell-offs. In contrast to previous findings for equity funds, I find no evidence indicating that bond funds
destabilize the corporate bond market by moving prices beyond fundamental values. I attribute this finding to
bond fund management. Although I find that investors demonstrate a bank-run like behavior, which is a potential
source of destabilization, bond fund managers hold a significant level of liquid assets, allowing them to manage
redemptions without excessively liquidating corporate bonds.
"Financial Innovation and Corporate Bonds" (with Caitlin Dannhauser)
Corporate bond Exchange Traded Funds (ETFs), a new form of financial innovation, provide investors with intraday liquidity in the illiquid corporate bond market. Since these investment vehicles are relatively new, little is
known about their risks. In this paper, we study an event in the summer 2013, knows as the Taper Tantrum, when
bond ETFs and mutual funds experienced massive unexpected outflows due to speculations about interest rate
hikes. We find that ETF outflows during the Taper Tantrum lead to a significant increase in exposed corporate
bond yields. The increase in yields lasts for seven months, which indicates a temporary fire sale effect. In contrast,
we find no fire sale effect resulting from mutual fund outflows. We attribute this contrasting finding between the
two vehicles to differences in portfolio construction and investor sensitivities. Finally, we study arbitrage
opportunities, created by ETF shares mispricing, and their impact on bond yields.
Work in
Progress
"Flight to Illiquidity and Corporate Bond Returns" (with Ronnie Sadka)
This paper introduces a new perspective on flight to liquidity in the corporate bond market. Although considered
safe assets in general, and during liquidity shocks in particular, we show that once a shock hits the market, liquid
corporate bonds underperform illiquid corporate bonds. This underperformance is temporary and can be attributed
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Work in
Progress
(Continued)
to the higher liquidity needs of the holders of liquid bonds, as well as to the tendency of investors to sell liquid
assets before other assets. Our findings therefore highlight the importance of investor liquidity needs and
investment horizon to determine the liquidity risk of a portfolio.
"Hedge Funds, Good Arbitrageurs or Bad Arbitrageurs?" (with Pouyan Foroughi)
This paper examines whether hedge funds consume or provide liquidity to the corporate bond market during
market turmoil. Several papers have documented liquidity consumption by hedge funds during market turmoil in
the stock market. However, we postulate while consuming liquidity in one market, hedge funds can provide
liquidity to other markets in which liquidity is more demanded, such as the corporate bond market. The findings
of this paper expand our understanding of stabilizing/destabilizing impacts of hedge funds beyond the stock
market. This paper also sheds light on the role of hedge funds in the corporate bond market, which has been
missing in the literature mainly due to data availability.
"Mutual Funds’ Investment Horizon and Destabilizing Behavior" (with Ali Ebrahimnejad)
A large literature has documented the importance of mandatory portfolio disclosure for mutual funds and their
changing behavior around mandatory disclosure dates. We exploit the exogenous variation in disclosure date,
determined by the random establishment date of the fund, as a proxy for mutual funds’ investment horizon and
study the impact of investment horizon on trading behavior. Funds very close to the next disclosure date tend to
sell (not to buy) distressed stocks, hence destabilize the prices. In contrast, funds with a longer time to the next
portfolio disclosure date are more likely to decide based on fundamentals and behave the opposite, therefore
stabilize the prices. We also examine the policy implications for the proposed increase in the frequency of
mandatory portfolio disclosure and the resulting market destabilizing behavior.
Teaching
Experience
Finance Department, Boston College
Investments (Professor Sadka), undergraduate & graduate level
Corporate Finance (Professor Nickerson), undergraduate level
Fixed Income Analysis (Professor Balduzzi), graduate level
Graduate School of Management & Economics, Sharif University of Technology
Workshops in Introduction to Finance & Investments and Behavioral Decision Making
Service
Ad Hoc Referee
Journal of Banking and Finance
Professional
Experience
Social Security Investment Company
Analyst
Honors and
Awards
Doctoral Scholarship, Carroll School of Management
References
Prof. Pierluigi Balduzzi (co-chair)
Boston College, Department of Finance
pierluigi.balduzzi@bc.edu
(617) 552-3976
Prof. Jonathan Reuter (co-chair)
Boston College, Department of Finance
jonathan.reuter.1@bc.edu
(617) 552-2863
Prof. Jeffrey Pontiff
Boston College, Department of Finance
pontiff@bc.edu
(617) 552-6786
Prof. Ronnie Sadka
Boston College, Department of Finance
sadka@bc.edu
(617) 552-0899
Tehran, Iran
05/2009 - 10/2010
2011 - Present
Prof. Hassan Tehranian
Boston College, Department of Finance
hassan.tehranian@bc.edu
(617) 552-3944
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