Research in economics and finance

Behavioural economics and finance is a growing area of research, examining human behaviour through social preferences, heuristics and norms. Our work seeks to understand the decision-making processes of individuals and businesses in real-world contexts. Using data from experiments, laboratory studies, and surveys, AUT researchers uncover fundamental principles with significant policy implications.

Selected research projects

• The price impact of tweets: a high frequency study - Assesses the impact of social media sentiment in terms of Twitter feeds on stock returns at the intraday level
• When Hollywood movies steal the show, stock returns dance more with the market! - Hollywood film releases attract US investors' attention away from the financial markets
• A theory of unanimous jury voting with an ambiguous likelihood - Examines collective decision-making in a jury voting game under the unanimity rule when voters have ambiguous beliefs
• Do you know that I know that you know…? Higher-order beliefs in survey data – Uses a survey of firms focused on their higher-order macroeconomic expectations. The project presents new understanding regarding the relationship between first-order and higher-order expectations of economic agents, including how they adjust their beliefs in response to a variety of information treatments.

Key researchers

• Professor Saten Kumar
• Professor Nick Nguyen
• Professor Matthew Ryan
• Dr Ni Yang

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AUT research drives impactful advancements in climate policy, sustainable finance and the transition to a low-carbon economy. We model the economic and employment effects of climate policies, assess responsible investment practices, and examine corporate greenwashing. Through economy-wide modelling and environmental, social and governance (ESG) studies, we provide actionable insights that support policymakers, investors and businesses in advancing sustainability and equitable transitions.

Selected research projects

• Searching for a just transition: Micro-level employment impacts of climate policies. - Develops and applies a modelling framework to estimate the micro-level employment impacts of climate policies in Aotearoa New Zealand
• Logs or permits? Forestry land use decisions in an emissions trading scheme. - Uses an economy-wide model, a forestry model and land use change functions to measure the expected proportion of farmers with trees at harvesting age that will change land use from production to permanent forests in New Zealand from 2014 to 2050
• The climate policy analysis (c-plan) model, version 1.0 - Documents Version 1.0 of the Climate PoLicy ANalysis (C-PLAN) model, presenting results for the model's baseline and a policy scenario
• Climate risk, ESG ratings and the flow-performance relationship in mutual funds - Examines the informational role of mutual fund sustainability ratings on the asset allocation decisions by investors when faced with climate risks

Key researchers

• Professor Niven Winchester
• Dr Sara Ali
• Dr Ihsan Badshah
• Dr Prasad Hegde

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The division between ownership and management in public firms often leads to managerial strategies – such as underinvestment or overinvestment – that may not align with shareholder interests. Boards of directors play a crucial role in mitigating these agency problems.

Our research highlights how directors’ characteristics significantly influence managerial decisions and overall firm value. AUT’s economics and finance department actively contributes to this field by examining corporate governance mechanisms and their implications for financial management.

Selected research projects

• Board cultural diversity and firm performance under competitive pressures - Examines the impact of board cultural diversity, based on directors' ancestry, on firm performance conditional on product market competition
• The value of academics: evidence from academic independent director resignations in China - Uses academic independent director resignations induced by the introduction of the Regulation 11 prohibiting academics from holding positions in Chinese public companies to examine their contribution to firm value
• Parent CEOs and corporate investments - Analyses the relationship between the number of the CEO’s children and corporate investment
• The impact of independent directors on their firms’ operational risk through their oversight on the firms’ working capital policies – Shows that independent directors are associated with lower firm operational risk through their oversight role on the firm’s working capital management

Key researchers

• Professor Nick Nguyen
• Associate Professor Olga Dodd
• Dr Jun Chen
• Dr Hardjo Koerniadi

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This research theme is dedicated to exploring and advancing areas that have been under-researched within the realm of investment funds globally and in New Zealand, such as mutual funds, hedge funds and exchange-traded funds (ETFs).

We focus on analysing the fund performance of both traditional and sustainable investments, fund flows, and market efficiency of these investment funds. Additionally, we test investor’s behaviour by identifying investment managerial skills including market timing and stock-picking under uncertainty arising out of economic policies, geo-political tensions and climate risks. We also test the implications of investor behavioural biases such as herding and loss aversion, and examine asset pricing implications in the context of funds, firms, and other investment securities.

Our research implications offer critical insights into the investment strategies that significantly influence financial markets, thereby contributing to the development of more effective investment practices and policies.

Selected research projects

• Anti-herding by hedge funds and its implications for expected returns - Presents evidence of anti-herding behaviour among the US hedge fund managers
• Economic policy uncertainty and institutional investment returns: the case of New Zealand -  introduces a monthly news-based economic policy uncertainty index for New Zealand (NZ EPU) and examines the pricing implications of NZ EPU on a large sample of institutional investors
• Economic policy uncertainty and fund flow performance sensitivity: Evidence from New Zealand. – Shows that fund flow performance sensitivity decreases with policy uncertainty  for actively managed equity funds
• Climate uncertainty and investor learning in sustainable funds - Presents a novel take on the effect of uncertainty on investor learning about managerial skills by examining the fund flow-performance relationship in ESG rated funds in the context of climate uncertainty
• The herds of bulls and bears in leveraged ETF market - Investigates the unexplored herding behaviour of investors in a leveraged exchange-traded funds (LETFs) market by examining US-listed LETFs, which offers both long and short positions with target return multiples (such as +2x) and inverse multiples (such as –1x and –2x) of the tracking indices in the form of bull and bear LETFs, respectively

Key researchers

• Dr Sara Ali
• Dr Stephen Bahadar
• Dr Ihsan Badshah
• Dr Prasad Hegde

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Financial wellbeing is gaining recognition as an essential component of overall wellbeing. Achieving financial security requires individuals to have the capability, motivation and opportunity to make informed financial decisions.

Our research focuses on understanding how financial capability develops, particularly among young adults. We investigate the effects of life milestones, emerging financial technologies such as Buy Now Pay Later and the role of financial education in shaping long-term financial stability.

Selected research projects

• Life lessons: Leaving home and financial capability of young adults. – Examines the impact of leaving home on the financial capability of young adults.
• Economies of scale: The case of KiwiSaver fees – Examines how the rapid growth in members and funds under management has impacted fees for KiwiSaver members
• Problem debt, buy now pay later (BNPL) and young adults in Aotearoa New Zealand – Examines the impact that BNPL, a new and largely unregulated debt product, has on the over indebtedness of young adults in New Zealand

Key researchers

• Professor Aaron Gilbert
• Dr Ayesha Scott (Adjunct)

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Our research explores global economic and financial interactions through various lenses, including international trade, global value chains (GVCs), regional and preferential trade agreements, international finance, investment flows and geopolitical risks. By analysing these factors, we provide insights into the dynamics shaping global markets and policy responses.

Selected research projects

• Did economic cooperation encourage trade in essential medical goods? Empirical evidence from the Asia–Pacific during COVID-19 – Examines the impact of regional trade agreements (RTAs) on trade in essential medical goods involving vaccine value chains in mitigating external shocks during COVID-19 pandemic
• Does globalisation drive long-run inequality within OECD countries? A guide to policy making – Examines whether or not globalisation has contributed to rising income inequality in OECD economies and the role of policymaking
• US cross-listing and domestic high-frequency trading: Evidence from Canadian stocks – Examines how US cross-listing enhances both opportunistic and high frequency trading (HFT) in the Canadian market
• Currency and commodity return relationship under extreme geopolitical risks: evidence from the invasion of Ukraine – Explores the relationship dynamics between currency and commodity returns around the Russian invasion of Ukraine
• The potential impact of tariff liberalisation on India’s automobile industry global value chain trade: evidence from an economy-wide model – Examines how India’s auto-industry and auto-parts trade, involving forward and backward linkages in GVCs, have been affected by its decision to opt out of the Regional Comprehensive Economic Partnership (RCEP) agreement.

Key researchers

• Associate Professor Olga Dodd
• Dr Rahul Sen

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AUT’s economics and finance department conducts in-depth analyses of market performance across diverse sectors, offering insights that shape regulatory and fiscal policy. By assessing the impact of government interventions on market behaviour and participant welfare, our research informs policy decisions both nationally and internationally.

We collaborate closely with economists at the New Zealand Policy Research Institute, leveraging the country’s leading Integrated Data Infrastructure. Our researchers maintain strong ties with policy agencies, and Dr Lydia Cheung holds a dual role as a Senior Economist at the Commerce Commission; New Zealand’s market regulator.

Our expertise spans tax policy, labour markets, health markets, competition policy and market regulation. Additionally, we actively explore social policy issues, including mental health, criminal justice, and equity concerns.

Selected research projects

• Effects of minimum wage rules on youth employment: evidence from a Danish discontinuity - Explores the impact of youth minimum wages on youth employment by exploiting a large discontinuity in Danish minimum wage rules at age 18, using monthly payroll records for the Danish population
• An empirical analysis of competition in print advertising among paid and free newspapers - Examines competition in the print newspaper advertising market in New Zealand, which involves paid daily and free weekly titles. This is the first study to explore how different ownership structures across two newspaper segments affect the competitive forces in local geographic markets
• The competitive effects of a discount retailer's entry into the grocery sector - This research uses detailed scanner data to analyse the effect of leading discount retailer’s entry into the grocery market on traditional supermarkets, finding a significant reduction in prices for the most perishable grocery categories
• The effect of violent assaults on youth victims and their parents - Explores the effects of assault victimisation on youth, revealing significant harm to their physical and mental health, education, and employment. Parents of these youth also experience adverse effects, reducing their labour market participation and increasing their reliance on mental health services and anti-anxiety medications

Key researchers

• Associate Professor Peer Skov
• Dr Lydia Cheung
• Livvy Mitchell (PhD candidate)

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AUT research in this field bridges economics and finance, addressing key issues such as financial markets and institutions, macroeconomic policy, inflation dynamics, economic uncertainty and market microstructure. By integrating economic and financial perspectives, we provide valuable insights into the interconnectedness of policy decisions and market behaviour.

Selected research projects

• Contracts and firms’ inflation expectations - Uses novel survey data to study firms’ inventory contracts and shows that firms purchase and sell inventory through three contractual arrangements: fixed price and quantity, fixed price only and fixed quantity only
• The effect of macroeconomic uncertainty on firm decisions - Using a new survey of firms in New Zealand, we document how exogenous variation in the macroeconomic uncertainty perceived by firms affects their economic decisions
• Economic policy uncertainty and institutional investment returns: the case of New Zealand -  introduces a monthly news-based economic policy uncertainty index for New Zealand (NZ EPU) and examines the pricing implications of NZ EPU on a large sample of institutional investors

Key researchers

• Professor Saten Kumar
• Dr Sara Ali
• Dr Ihsan Badshah
• Dr Prasad Hegde

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