Navigating a PhD in Business and Economics

Starting a PhD can be daunting task. We sat down for a Q&A with recent graduate Bill Zu, who told us about how his research could make a real impact on the economy, his tips for choosing a PhD program and why industry needs more PhD grads.

Congratulations on completing your PhD! Tell us about your research?

My Ph.D. thesis examined how mutual funds’ investment choices can affect the real economy. I found that the extent of mutual funds’ participation in new equity issues can predict economic output, which suggests that funds’ involvement in new issues can improve the productivity of investment projects. This screening function helps economic growth.

So this suggests that if more investment projects are being funded by mutual funds in our economy (as opposed to less informed retail investors), this could potentially be productivity enhancing and would benefit the broader society in addition to the investors.

So how could your research benefit the corporate sector?

I think my research could help us to understand and view these asset managers from a different perspective. The research shows that in addition to just chasing for returns, these asset managers have another important role in the real economy by making capital allocation decisions that fund the real investment projects in our economy, such as buildings, factories and production lines, in a way that is not too dissimilar to what a bank would do. This is an important aspect of the asset management industry that has often been overlooked in the past, and my research fits into a rapidly expanding field that is trying to better understand this channel of financial intermediation and the risks associated with it.

Wow – so given mutal fund asset management could have such a large impact in the economy, do you think more research is needed?

I think so – given the large scale of the asset management industry and the increasing role it plays in our society, we do need to understand better how the industry interacts with the real economy. The good news is a lot of research is being done in this area these days.

There is often a stereotype that PhD students in your field are chained to a desk crunching numbers – is this true?

Ha – well there is always going to be a bit of that. But during my PhD I managed to do a lot outside the office and Melbourne. I had the opportunity to present and discuss at several conferences during my studies, including the Northern Finance Association 2015 (in Ottawa, Canada), Financial Management Association 2015 (Nashville, USA) and the Australasian Finance and Banking Conference 2013 (Sydney). In addition, I also had the opportunity to visit the Carroll School of Management, Boston College in early 2015 as a visiting PhD student, thanks to the help of the Department of Finance.

The hardest part of the PhD for me was, as you say, the number crunching, conducting the analysis and making sense of the model and the data, especially when the results appear a bit counter-intuitive at first. These are also the most interesting times though because that’s when you find out things that only become more apparent when you dig deeper.

Let’s take a step back now, why did you choose to start a PhD at the University of Melbourne?

I’ve always been interested in finance since my undergraduate and Honours studies. After some brief industry experience, I decided to do a Ph.D. to further pursue the research path. I joined the University of Melbourne because having visited the Department of Finance, I really liked the research environment here and the support it offered to Ph.D. students, and Melbourne is a great city to be in!

You’d agree, PhD topics are quite niche. How did you become interested in the area of your research?

During my Ph.D. coursework, I became interested in understanding the interactions between financial intermediaries and the real economy. Although the literature on this topic is very extensive, I noticed that most of it focused on the banking sector, and few studies have attempted to link the non-banking financial intermediaries such as mutual funds and hedge funds (who are the dominant players in the stock market) to the real economy. So I have decided to examine this area, given the importance of these intermediaries in the economy.

Bill Zhu, phd
Dr Bill Zu

Potential PhD students are sometimes unsure of how to go about choosing a university for their studies. What are your top tips?

1. Read the literature: As part of my Honours I got to know a bit more about academic research and the various topic areas in finance. This turned out to be quite helpful in knowing the key researchers that worked in various areas and which universities they worked at.

2. Check the fine print: putting together your PhD application takes time, so make sure it’s right. Getting to know the faculty members a bit beforehand certainly helps.

3. Location: I wanted to move to a bigger city, especially one with more access to both academic and industry resources. Melbourne is always ranking well in top city surveys and I’d heard from friends it was a great place to live.

4. Scholarships: If it wasn’t for the scholarship I received from the University I don’t know how I would have been able to complete my studies. Make sure you understand what your options are and if the scholarship covers tuition and a living allowance/ stipend or just one or the other. In addition, the Department of Finance also funded PhD students, including me, to go on interstate and international trips to attend conferences and to present our work. My travel to the US for example, was funded by the Department.

5. Think: Taking on a PhD is massive! Take some time out to think about whether this is what you really want to do.

You’ve just landed a great job at Goldman Sachs, tell us about it.

Yes, I have started working at Goldman Sachs, Global Investment Research, as a macroeconomist and portfolio strategist. The role is closely related to my PhD research area, in macro-finance. I was very fortunate that the role was very suited to my research areas and the firm was very keen to hire a PhD graduate with academic exposure as well as an interest in the practicalities of financial markets.

So do you think finance companies like Goldman Sachs are interested in graduates with a PhD in particular.

Yes, I think so. Financial services firms nowadays are increasingly interested in hiring PhD graduates because of their experience in handling large amounts of data, their ability to think through business problems in a systematic and rigorous manner, and their communication skills in conveying complex messages in a simple way. The academic experience is also very helpful in providing companies with access to a different perspective on many issues and in understanding the latest progress in research.

PhDs are seen as very academic. Do you think a PhD prepares students well for working in the corporate sector?

Yes, for sure. My PhD experience has helped me immensely to understand the academic literature and to apply them to practical problems, and also to think about problems in a systematic and rigorous way. Plus as my current work is still a research role, I still actually need to keep up with academic research.

Any final thoughts for prospective PhD students out there?

I really enjoyed my experience at the University of Melbourne. It was an amazing opportunity to be studying amongst such a great group of academics and students, and to be able to meet with great researchers from all around the world. To me it was a life-changing experience.

You’re ‘Doctor Bill Zu’ now; did you rush out and change your title on everything?

No, I still haven’t updated my LinkedIn! My mum has told ALL our family friends though, she was pretty excited about it.


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