Fiscal Fortitude

Chris Stivers, PhD Earns Lowry Watkins Jr. Endowed Chair in Finance Fellowship

Recently named as the Lowry Watkins Jr. Endowed Chair in Finance, PNC Professor of Banking and Finance Chris Stivers, PhD, strives to elevate the finance department in his role as department chair. He took some time to share with us what earning this fellowship means to him, along with the professional and academic journeys that brought him to the University of Louisville College of Business, how he has worked with the finance department faculty to elevate educational and research opportunities for students and faculty, and goals to aid the department in continued growth.

College of Business: Could you share your background and what life was like for you growing up? 

Chris Stivers: I grew up in rural Meade County, KY, about an hour from Louisville, with my parents and two brothers. At about age 12, I started working for local farmers in a variety of farmwork and then later worked with my father when he started his construction flooring business in 1978. I enjoyed sports, especially basketball. I was a good student, graduating as the salutatorian at Meade County High School in 1980 and winning the science and math awards as the top graduate in those areas.   

College of Business: How did you first develop an interest in chemical engineering, and what led you to pursue your BS in this field at UofL?

Chris Stivers: I was always interested in STEM fields, and engineering was a great career. I chose UofL because of the strong reputation of the Speed Scientific School – their engineering program had a built-in one-year internship to gain experience with pay. [I also chose UofL because] of the location, [and] my father had been a first-generation graduate of UofL.

College of Business: How did your interest in finance evolve, leading you to earn your PhD in Financial Economics?

Chris Stivers: Growing up, I read Money magazine and other finance periodicals, and financial markets always intrigued me. Finance is a fascinating, dynamic field and has an important role in the economy, valuing uncertain future cash flows and allocating investment funds to their most productive use. After graduating from UofL from the Speed Scientific School in 1984, I served for eight years as a nuclear-trained naval submarine officer. Following my service, I considered getting an MBA. However, with my engineering and math skills and strong interest in business and finance, I applied for finance PhD programs instead [and] earned my PhD in financial economics from the University of North Carolina at Chapel Hill as a full-time student there from August 1994 to August 1998. 

College of Business: Why did you become a finance department faculty member in the College of Business at UofL?

Chris Stivers: After earning my doctorate from UNC-Chapel Hill in 1998, I served on the Terry College of Business faculty at the University of Georgia from fall 1998 to spring 2010. I earned tenure at UGA as an Associate Professor in 2006. After a good 12 years at UGA, I learned of the opportunity at UofL. The College of Business at UofL was on an upward trajectory, both in terms of new programs and in research, with Dean Charlie Moyer and with a number of recent strong faculty hires. The combination of the excellent opportunity and the closer proximity to family persuaded us to make the move to Louisville from Athens.

College of Business: As Chair of the Department of Finance, what departmental achievements are you most proud of, and what are some goals for the future?

Chris Stivers: Over my two and a half years serving as the department chair, I am most proud of the development of the new real estate minor. This minor opened for business in spring 2024.   This initiative included fundraising, with an incredible assist from Chris Dischinger and LDG Development; excellent faculty hires with Patrick Nessenthaler (full-time) and Cora Henderson (part-time), curriculum development of three new courses, and recruiting. We think the program is off to a great start, with about 27 minors currently declared. Additionally, I [was] proud to start a new course in spring 2024, where students manage a real-life stock portfolio. Currently, the student fund contains about 40 stocks worth about $150,000.

There are a number of program initiatives under consideration for future development, including the development of online versions of all the required BSBA-finance classes so that we can offer a fully online finance BSBA program. [Additionally, we are] developing classes and partnerships to facilitate students earning premier professional designations, such as the CFP (Certified Financial Planner) and/or the CFA (Chartered Financial Analyst) designations. [Another] goal is to continue the upward trajectory of the finance department’s research profile by continuing to support the research efforts of the current faculty and by hiring top-notch new assistant professors in the future.

College of Business: What are some of the most rewarding experiences you have had as a faculty member and department chair at UofL?

Chris Stivers: The development of the real estate minor and the student-managed fund course has been especially rewarding. As linked to these new programs, we are already seeing placement success for our students. It is also rewarding to have such a strong and collegial finance faculty, who do a great job both in the classroom and in research. Finally, it has been rewarding to publish 17 peer-reviewed research studies since arriving at UofL in the fall of 2010, with 13 of those articles being in journals regarded as Elite on the College of Business’s list and/or as a top-rated publication on the well-regarded ABDC (Australian Business Dean’s Council) journal ranking list.

College of Business: What was it like to learn you had been named the Lowry Watkins Jr Endowed Chair in Finance, and what is the purpose behind this endowment?

Chris Stivers: I am deeply honored to be named the Lowry Watkins Jr. Endowed Chair in Finance. Being named to such a prestigious endowed chair position is a long-term goal of probably every research professor as they start out. It is the culmination of over 25 years of work, with 27 published research studies and over 2500 citations. The endowment will benefit the College by providing funds to support both my teaching and research. On the teaching front, for example, I have used some of the funds to subscribe to investment data and analysis services for use by the students in our student-managed fund class (FIN 402). This access helps students in their stock research and in their learning about financial markets. On the research front, the endowment earnings support my scholarly activities, including data access, travel to present my research, and summary salary support to enable research time. One of the important markers of a strong research school is the existence of multiple endowed chair positions. So, the department is deeply appreciative to Lowry Watkins for his important help in this area. 

College of Business: How would you like to see this endowment utilized to further the educational opportunities for students pursuing a degree in finance?

Chris Stivers: The funds from the endowment will be useful in enhancing educational opportunities in special courses, such as the student-managed fund class (FIN 402). As an example, the endowment funds will support student access to a premium subscription to Seeking Alpha, a premier stock data and analysis service. 

College of Business: What are some of your research interests, and what current studies have you conducted?

Chris Stivers: My research achievements are in empirical investments and financial market behavior, including the equity, bond, and derivatives markets. My work has contributed to the field of financial economics by promoting a better understanding of asset return behavior, including volatility, the correlation between stock and bond returns, how stock risk premia and momentum payoffs vary with economic conditions, how risk is related to interest rates, and how inflation shocks are related to security returns. From a broader perspective, my research focuses on asset allocation, price formation, risk management and diversification, and market informational efficiency. 

My more recent research is typified by the following two recent articles since 2022. One article (in the Journal of Financial Markets, 2022) showed that Treasury bond risk (as measured by the implied volatility derived from T-bond options) has an important negative partial relation with future equity risk premia, helping to better forecast time-variation in excess stock-market returns. Another article (in Real Estate Economics, 2024) showed that inflation shocks tend to only be reliably related to public real estate returns during weak economic conditions, such as recessions, and the relational direction between inflation shocks and real estate returns varies depending upon whether the weaker economic state is more reflective of stagflation concerns or deflation concerns.  

I have published 26 peer-reviewed research articles in highly regarded academic journals. Five of these publications appear in journals in the top ‘Financial Times 50’ list and another 15 in journals that appear either on the Elite COB list and/or in the top-rated category of the ABDC (Australian Business Dean’s Council) journal ranking list.

College of Business: What published research have you conducted that is most important to you, and why?

Chris Stivers: My best-known paper, `Stock Market Uncertainty and the Stock-Bond Return Relation,’ was the first to show that the correlation between stock returns and Treasury bonds (as the two largest financial asset classes) tends to be more negative following episodes of high risk (as measured by the implied volatility derived from S&P 500 equity-index options). This paper was published in the top journal, the Journal of Financial and Quantitative Analysis (JFQA, 2005), which is a Financial Times 50 journal. This paper is currently a top ten cited paper in the JFQA for papers published in the last 20 years, with 491 citations in other published papers. Further, since 2009, the Kansas City Federal Reserve Bank has published a monthly `Financial Stress Indicator’ index. Their stress index includes the recent correlation between stock and bond returns as an input, credited (in part) to this JFQA article. 

More recently, my paper in Real Estate Economics (2024) is important to me because it establishes new perspectives on how inflation shocks are related to public real estate returns, and this subject area relates to our new real estate minor. I also have a paper that was just accepted in Financial Management (2024), which shows that time-variation in the US equity premium is captured well by a parsimonious model with the CBOE’s implied-volatility index VIX and market sentiment. The equity premium declines linearly with sentiment but increases nonlinearly with VIX, stepping up appreciably when VIX exceeds a threshold around its 80th to 85th percentile. This paper should be of high interest to both academics and practitioners.

College of Business: Why do you believe prospective students can benefit from choosing to pursue a finance degree at UofL?

Chris Stivers: Finance jobs remain plentiful, and finance can be a rewarding and fascinating career choice. The finance BSBA program at UofL provides students with both a strong business breadth background in all core business disciplines (accounting, marketing, management, and CIS) and a strong ‘deep dive’ into finance with two courses in corporate finance and additional courses in international finance, investments, financial derivatives, financial markets and institutions, and a capstone case-based finance class. At UofL, students are encouraged to work in internship positions while earnings their degree and they can earn up to six academic credit hours in their finance degree through this work experience. Louisville is where business takes place in Kentucky, providing a rich environment for business exposure and internships for students. With the new real estate minor and other minors and certificates at the COB, students can complement their finance majors in a variety of interesting and professionally rewarding areas. The finance department also offers a hands-on course where students manage an actual real-life stock portfolio.

College of Business: When you are not working, what do you like to do to relax?

Chris Stivers: I am fortunate in that I find financial research to be relaxing, so most of the time it is not really work. Beyond that, I enjoy sports, especially basketball, hiking, and traveling.

Are you interested in earning a degree in finance? Visit us at https://business.louisville.edu/academics-programs/undergraduate-programs/finance/ to learn more.

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