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William R. McCumber JPJ INvestments Endowed & Assistant Professor of Finance - College of Business - Louisiana Tech University

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Research

Network representation of "average" North American bank executives in 2004. Dots are people, colored lines represent relationships between executives. Purple are banking relationships, green are hedge fund relationships.

If you would like to learn more about executive networks in finance, I've prepared a very brief introduction you may view here.

Selected publications following. In each case, click the button to be brought to the full paper.

We examine the relationship between stock market liquidity and the network centrality of firm executives. We find that firms whose executive officers are more central in the network of executives have narrower bid-ask spreads. We use an exogenous network centrality shock of executive turnover and report that liquidity improves after firms hire executives with greater centrality. We present evidence that improved liquidity is attributable to efficient information flows around executives in more advantageous network positions.

We reconsider whether hedge funds’ time-varying risk factor exposures are predictive of superior performance. We construct an overall measure, BETA_ ACTIVITY, of fund managers, and present evidence that top beta active managers deliver superior long-term out-of-sample performance compared to top alpha active managers. BETA_ ACTIVITY captures the time-varying nature of beta exposures, and can be interpreted as a common factor of both sSR (Systematic rRisk ) (SR) and (1-R^21-R2) measures. BETA_ ACTIVITY also compares favorably to extant measures of market timing, capturing the explanatory power of such measures of hedge fund performance.

The cost and terms of private debt are affected by the social capital of the borrowing firm’s chief financial officer (CFO), proxied by measures of social network centrality that identify the relative position of CFO in the hierarchy of executives. Firms with CFOs possessing higher social capital issue new loans with lower spreads and fewer covenant restrictions, controlling for all direct connections between borrowers and lenders. Spread reductions are stronger for opaque firms and when CFOs lack objective reputation verification. The results hold when controlling for CFO personal characteristics and firm attributes related to network centrality.

This paper has been featured on the Columbia Law School Blue Sky blog, the Harvard Law School Bankruptcy Roundtable blog, and the Oxford Business Law blog. We provide evidence that large creditors exert a governing influence over corporate borrowers outside of covenant (technical) violation and payment default states. We show that, subsequent to syndicated loan origination, borrowers decrease capital inefficiencies, increase investments in productive assets, and improve operating performance relative to non-issuers. When firms are more opaque, syndicates are more concentrated in that lead arrangers hold a greater percentage of loan shares. We present evidence that creditor influence is increasing in the percentage of the deal retained by the lead arranger. Equity holders benefit from creditor influence subsequent to loan origination; cumulative abnormal stock returns around loan origination are positive and significant. These findings are robust to technical violations and shareholder governance. When creditor positions are more concentrated, creditor governance effects are of the same sign and magnitude as those provided by concentrated equity positions.

Teaching

Innovation in Teaching Award, College of Business, Louisiana Tech University, 2018 and Teacher of the Year, College of Business, Louisiana Tech University, 2016. Student evaluations "overall instructor rating" from 2015-2018: 3.9/4.0

Click the above for a formal statement of teaching philosophy.

Testamonials

Dr. McCumber hands down is one of the most knowledgable professors I have met. He makes complicated subject matter come to life. He is the number one reason I would come back to get a doctorate.
Best professor at Tech! We are so lucky to have him!
The only weakness I see is that the class is not long enough. This was such an informative and inspirational class that I was always left wanting more. Dr. McCumber goes out of his way to engage students in and out of the classroom. Content is always clear and explained well. It is very apparent that this professor is passionate about finance.
Very enthusiastic about the subject and I greatly appreciate the real world examples. Really helped me understand some concepts I'm new to. Overall, one of the best instructors I've ever had. And writing things on the whiteboard instead of reading off of slides really helped.
The real world examples and current events are key to making the material relevant. I really enjoyed this and learned a lot. I appreciate that you realize in your teaching methods that not everyone learns the same or has a level of comfort with finance principles.
Thanks for keeping class fun and caring that we learned the material!!
Created By
Bill McCumber
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Created with images by Pexels - "blur chart computer" • Malte Schmidt - "untitled image" • Nathan Dumlao - "untitled image" • Priscilla Du Preez - "untitled image"

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