Éric Pichet (born in 1960) is a French economist and a post-graduate professor at KEDGE Business School. His main areas of expertise include market finance, monetary economics, fiscal economics, corporate governance and fiscal governance.
Biography Eric Pichet is a graduate of HEC Paris, ESORSEM (French Staff College) and IMPI (postgraduate programme in Wealth Management and Real Estate of Kedge Business School). He has a Ph.D in Management from the University of the Littoral Opal Coast with a thesis entitled "Convergence between Corporate Governance Practices in the large listed companies". In 2008, he qualified an HDR Ph.D supervisor at the same university with dissertation entitled "An Hypermodern Analysis of Contemporary Social Governances". He obtained a Phd in Law from l'Université Panthéon-Assas with a thesis entitled « Towards a General Theory of Social and Tax Expenditures »
Pichet began his career at French stockbroker CHOLET DUPONT before moving on to HSBC where he traded options and derivatives before becoming a financial analyst and joining France's SFAF (French Society of Financial Analysts). He has also worked as an independent financial expert and acted in an independent director's capacity since 2004. He is a member of the IFA French Directors Institute's research centre and sits on the boards of several investment companies in France, including Gestion 21 and Signaux Girod (also Chairman of the audit Committee). Pichet works with some publicly listed international hedge funds outside France and is Chairman of the Board of Directors "Eric Marcel Xavier Pichet Ph.D. Executive Profile and Biography", bloomberg.com, 06/02/15 at Diapason. Lastly, he belongs to the APM (), where he also works in an expert's capacity, and is chairman at CORAL, a French think tank of authors, book publishers and editors.
Currently employed as Professor of Economics at KEDGE Business School, since 2000 he has also been Director of KEDGE's postgraduate IMPI Wealth & Real Estate Institute (IMPI). Pichet is a fellow at the Royal Institution of Chartered Surveyors, an Associate Researcher at the University of Bordeaux IV LAREFI research centre and CEFEP Research center at the University of PANTHEON-ASSAS and, since 1990 Professor at the SFAF Training Centre. In 2011, he published a methodological guide for research professors seeking a French HDR Ph.D supervision qualification. The book, entitled "Art of the HDR", contains advice on writing HDR dissertations and supervising Ph.D candidates. In 2019 he published a methodological and practical guide for PhD students in social sciences. The book entitled "L'Aventure de la Thèse" contains global advice on Pdh Dissertation.
Theories Éric Pichet has developed theories in different areas.
Corporate governance theories
Enlightened shareholder theory Enlightened Shareholder Theory "Enlightened Shareholder Theory: Whose Interests Should Be Served by the Supporters of Corporate Governance?", papers.ssrn.com, 05/09/08 is an advanced and essentially shareholder-oriented corporate governance theory. The rest of Pichet's body of work in this area, including his 2006 PhD thesis on the "Convergence between corporate governance practices in large publicly listed companies with diffuse shareholdings", allows him to define three main categories of governance principles that can be applied in large publicly listed companies. These principles : Ensure the transparency of corporate information Ensure shareholder control of the company, specifically via balanced boards (mixing independent directors with different competencies) and optimised board procedures. Enable the whole of the board to participate in corporate strategising, not just the CEO.
Financial Institution governance theories After analysing the role that failed governance mechanisms played in the Kerviel affair, "What Governance Lessons Should be Learnt from the Société Générale's Kerviel Affair?", papers.ssrn.com, 14/10/10 Pichet detects a need for major improvements in the governance of large financial institutions, based on: Large banks' internal control systems reporting to the board instead of to the executive Boards being able to hire financial market specialists to develop greater authority in this area A systematic development of specialist board committees, notably for strategy and risk control purposes
More generally, having analysed financial institutions that made huge losses in 2007–2010, he identifies 6 symptoms What Kind of Financial Regulation for the 21st Century?", http://papers.ssrn.com, 19/03/2012 that are always present under these conditions, which create an explosive cocktail when combined. The symptoms include:
Having a power-hungry and authoritarian leader (Richard Fuld at Lehman, Sean FitzPatrick at Anglo Irish Bank) driven by an insatiable need for social recognition and obsessed by the desire to unseat the current leader (Goldman Sachs, in this instance). Failed internal governance systems, always involving the board of directors, who on each occasion turned out to be incompetent in terms of managing their strategic control function, and/or too subservient to the executive. An almost unlimited ability to access cheap short-term funding. Massive investment of short-term borrowings in high yield assets with over-estimated safety and liquidity. Between 2002 and 2006 this was best exemplified by direct or indirect investments in property; mortgage loans backed by property assets (i.e. Northern Rock); or lastly, investments in other assets index-linked to property or property loans, such as CDOs, subprimes, etc. Excessive gearing, frequently 20 or 30 times the equity investment on these operations. Failed external regulation mechanisms, due either to excessive complicity between regulators, governments and large financial institutions (Iceland, Ireland); incompetent regulators (Iceland); or insufficient monitoring (the Bank of England's "light touch" regulation). Note other dysfunctions, such as the fact that the Fed never tries to burst asset bubbles; a poor distribution of tasks among different regulatory bodies (in the UK, between the FSA, Bank of England and HM Treasury; in the US, the Fed's failure to monitor investment banks); or outright complicity with the institutions that the regulators were supposed to control (as in Ireland).
When all six conditions are met, financial institutions can experience major losses causing them to collapse (Lehman Brothers). Fundamentally, this is an example of systemic risk. As Pichet teaches students, "The needle that pops the balloon (i.e. subprime loans) is just the trigger for the crisis, not the root cause".
The best way of avoiding future financial failures is to: Ensure that large banks provide transparent information Reinforce boards' authority and ability to control corporate strategy Enhance regulatory quality
He also criticises three legislative trends that began after the crisis: Too many purely formal regulations (like Dodd Frank), The illusion that splitting commercial and investment banking offers a viable solution Banning short sales, which has no impact on price changes
Tax theory
Wealth tax Theory and political consequences Although Pichet does not contest the theoretical utility of wealth taxes in modern fiscal systems, his analysis of the economic consequences of the ISF "The Economic Consequences of the French Wealth Tax", papers.ssrn.com, 05/04/07 French Wealth Tax led him to the conclusion that this particular levy yields half as much as it costs in lost revenue. "Here's how a revamped wealth tax could fuel the COVID recovery",weforum.org,03/08/20 He took clearly position against the "French utopia" of a Global tax on the Superrich. "An Immodest Proposal: A Global Tax on the Superrich",businessweek.com,04/10/14
His research "Democrats Love a Wealth Tax, But Europeans Are Ditching the Idea",bloomberg.com,03/28/19 fuels the debate set up in the US "Where Wealth Taxes Failed",wsj.com,11/04/19 by Senator Elizabeth Warren "Why Europe Axed Its Wealth Taxes",nationalreview.com,03/27/19 about the possibility of an annual tax on household wealth of 2 percent on net wealth above $50 million and 3 percent on net wealth above $1 billion. "Estimating the Economic Impacts of Wealth Taxation in France", econ.berkeley.edu
Optimal taxation theory Having authored two biographies about Adam Smith, a strong influence in his writings, Pichet's idea is that taxation must be based on four principles formulated by Smith in "An Inquiry into the Nature and Causes of the Wealth of Nations", albeit only after adapting them to the 21st century: Fairness: taxes must be paid according to each person's resources and must integrate the Polluter Pays Principle, Judicial Security: prohibition not only of all forms of arbitrariness but also all forms of insecurity for however long the taxpayer needs to manage the incentives associated with the initial measure, Savings principle. Taxes must be as low as possible to avoid harming economic development. This explains why in 2011 Pichet advocated doing anything possible to reduce the deficit. He disagreed, however, with the proposal that France's Fillon government put forward in its September 2011 second Budget reading to raise taxes by €11 billion and cut spending by €1 billion. Rather than this to sustain the country's growth dynamic, he suggested parity between tax rises and spending cuts. Convenience principle. Tax payments need to be made easy for taxpayers. This is congruent with the principle of intelligible taxation that France's Constitutional Council "Décision n° 2005-530 DC du 29 décembre 2005", www.conseil-constitutionnel.fr, 29/12/05 enacted around the turn of the century.
General Theory of Social and Tax Expenditures In an initial study published 5 April 2012 in La Revue de droit fiscal"Tax Expenditure Theory and the Reform of French Loopholes", papers.ssrn.com, 18/04/12 Pichet distinguishes between simple tax determination modalities and actual tax loopholes, his idea being that fiscal advantages (like family allowances) awarded to dependent or disabled persons do not constitute tax loopholes but are instead ways of determining the amount of tax owed in France's benchmark tax system. His suggestion was that tax expenditures that are illegitimate (because they lack incentivising effects or are too costly or unfair) be eliminated. He set up a methodology that can be used to assess tax loopholes in terms of their level of usefulness and to eliminate any tax expenditures that serve no purpose.
In 2016, Pichet published his General Theory of Social and Tax Expenditures in an article published in La Revue de droit fiscal dated 8 September 2016."General Theory of Social and Tax Expenditures and Proposals for Recasting the French System of Tax 'Loopholes'", papers.ssrn.com, 08/09/2016 The theory is based on the idea that all compulsory levy systems are divided into six main categories called specific tax reference segments, each featuring a set of homogeneous fiscal standards enabling a methodical identification of relevant social and tax expenditures. Pichet followed this up with a rigorous doctrine in which individual exception provisions are identified using a series of six successive filters analysing their legitimacy, utility, relevance, efficiency, effectiveness and social acceptability. The analysis is prescriptive in nature and leads to a general doctrine in which each specific reference segment can be monitored.