Bridging Theoretical & Practical Finance: The Transfer of Knowledge w/ Dr. Matthew Faulkner

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Dr. Matthew Faulkner, CFA - Finance Professor at San José State University and Trustee for the City of San José Pension Fund - discusses bridging the gap between financial theory and real-world practice on our latest episode of the CFA Society San Francisco podcast. 

Join our show's host, Tanya Suba-Tang - Membership Director at CFA Society San Francisco - as she delves into Dr. Faulkner's compelling journey from academia to practical application. Dr. Faulkner's perspective and experiences highlight the importance of collaboration between academics and practitioners, emphasizing the unique contributions each group can make to the field of finance and paving the way for future financial innovations.

Whether you're an academic, a practitioner, or someone considering a career in finance, this episode is packed with valuable insights on leveraging both theoretical and practical knowledge to make more informed financial decisions.


Meet Dr. Matthew Faulkner

Dr. Matthew Faulkner, CFA is a Finance Professor at San José State University where he teaches undergraduate and graduate students in corporate finance and business valuation. His research interests intersect corporate finance and behavioral finance to understand why and how companies and management make decisions while his private consulting work is in valuation. 

In addition to his academics, he is a Trustee for the City of San José pension fund, serves as a FINRA arbitrator, and a volunteer with CFA Institute. Dr. Faulkner holds a bachelor’s degree in finance from UNC-Wilmington, an MBA in international finance and investments from the University of Valencia, Spain, and UNCW, and a doctoral degree from Florida Atlantic University.

If you'd like to learn more about the show, have a topic or speaker to suggest, or would like to leave us a comment, email [e-mail].


This podcast is produced by CFA Society San Francisco, a not-for-profit professional association, providing professional learning and career resources to over 13,000 investment industry professionals worldwide. To learn more about CFA Society San Francisco, visit our website or connect with us on LinkedIn.

The information contained in this podcast does not constitute financial or investment advice. Please consult your own financial advisor for information concerning your specific situation.

Episode Transcript

Lindsey Helman (00:06):
Hello and welcome to the CFA Society San
Francisco podcast, where weinterview and discuss trends
with leaders from across theinvestment and finance industry.
This month, our host TanyaSuba-Tang, membership Director
with CFA Society San Francisco,had the pleasure of speaking
with Dr.
Matthew Faulkner, financeprofessor at San Jose State
University.

(00:26):
Listen in as they discuss theroles of academics and
practitioners and the transferof knowledge.

Tanya Suba-Tang (00:34):
Hey, Matthew, great seeing you today.
How are you?

Dr. Matthew Faulkner, CFA (00:37):
Good Tanya.
Thank you for having me here.
It's great to see you.

Tanya Suba-Tang (00:40):
Well, thank you for joining me today.
So, M matthew, I'm reallyexcited to get into our
conversation, because todaywe're going to talk about
academics and practitioners andobviously, as a San Jose State
University assistant professorof finance, you have a little
bit of knowledge behind this.
So we're going to talk aboutknowledge transfers between the

(01:01):
academics and practitioners and,like I said, you are an
academic and occasionally apractitioner.
So set the stage for ourdiscussion, for our listeners,
if you please.

Dr. Matthew Faulkner, CFA (01:10):
Of course.
So again, my name is Matthew.
I am a trustee for the City ofSan Jose's Pension Fund, as one
of my practitioner works, andvolunteer for CFA Institute, and
then my major role is theprofessor of finance at San Jose
State, and I'd like to take youon a bit of a journey here
regarding the financial marketsand how we work together.
And I'd say imagine a vast,tumultuous ocean.

(01:33):
Standing next to the ocean, wehave the academics.
They're the so-calledcartographers who map the
currents and the winds.
They theorize the best routesand methods to navigate the
waters safely and efficiently.
They work tirelessly, they havetheir data, they have models,
they have simulations andthey're attempting to understand
every let's call it wave, tide,whirlpool.

(01:56):
And on the ocean we have thepractitioners.
We'll call them the seasonedsailors and the captains who are
out on the open sea every day.
They feel the wind in theirhair, the deck beneath their
feet, they make split-seconddecisions based on the reality
around them.
Sometimes they follow the maps,other times they have to alter
the maps, and sometimes theyhave to throw the map away and

(02:19):
rely on gut instinct honed bytheir experiences.
So, as a finance professor,practitioner combination, I kind
of stand on the shore betweenthese two worlds.
Today I'm speaking more focusedfrom the academic side, but I'm
constantly marveling at howboth are so essential yet they
often find themselves speakingdifferent languages, sometimes

(02:40):
questioning the other's map orthe reality of the sea.
So I guess today, setting thestage, I want to take you on a
bit of a voyage, exploring thesetwo worlds, taking the
perspective of an academic,trying to understand the
challenges faced between workingtogether and leveraging the
unique strengths to make better,more informed decisions, to
understand financial markets.

Tanya Suba-Tang (03:00):
Well, thank you for that.
So, as mentioned earlier, youare assistant professor of
finance.
You have your CFA and your PhDas well, so you know that's an
interesting combination.
So tell us more about theprocess of becoming an academic
route and getting your PhD.

Dr. Matthew Faulkner (03:26):
Certainly, I think in this discussion, i
It's useful to understand whatit's like to get a PhD, for us
to, as academics andpractitioners, to understand
each other better.
But it typically starts the wayyou'd imagine any upper level
schooling would.
You take master's level classesand you start working in the
kind of your basic setting, butthat doesn't last long.
That's only one or twosemesters.
The rest of your time is spenttrying to become a researcher.
You understand research methods, how to work with data, how to

(03:47):
find statistical significance,and then you spend all the rest
of your time reading financialtheory papers, reading the
academic research and thentrying to develop your own and
honing in that skill set.
So if I had to give twoumbrellas that come out of the
PhD program that I wasn't awareof when I started, was you learn
to just question everything.

(04:08):
So, regardless of what getsthrown at you, you question
what's the reason behind it,what was the theory developed,
how did they test it?
And then, when you are doingyour own research, you try to
find generalizable results, soresults that hold generally
across the entire set ofcompanies y ou may be examining
- S&P 500, all publicly tradedcompanies or international - as

(04:31):
opposed to trying to understandone specific situation.

Tanya Suba-Tang (04:34):
Wow, so, you know, many of us have no idea
what it's like getting a PhD, sothat's a very thorough and
thank you for sharing yourexperience.
So now that you've the journeyto better understand and kind of
settings of academics andpractitioners, can you kind of
explain what are some of thechallenges and benefits of
practitioners working withacademics and maybe vice versa?

Dr. Matthew Faulkner, CFA (04:57):
Yeah, certainly I'll start with the
challenges, and some of thisgoes into the idea of what the
training was.
But it's not uncommon to hearthat academics sometimes are
seen as too theoretical andmaybe disconnected from practice
.
So that's always going to be abit of a challenge.
But hopefully understandingwhat our goal in research is

(05:18):
will help practitioners andacademics understand each other.
I'd say the second challengewould be I don't want to.
I'll speak a little bitpersonally, but we tend to be
inconclusive.
The idea of questioningeverything doesn't really lead
you to solid foundationconviction that you would have
on any specific question.
And lastly, I'd say thechallenge could be we're slow.

(05:40):
It takes a long time to developtheories, to execute analysis
and then the publishing researchprocess it could be years,
versus having to make a decisiontoday.
So those would be the threechallenges.
I'd toss out.
The benefits.
I'll point out that we'rethinkers, we like to deep dive
and we do question everything.
This could be awesome to havean alternative perspective from

(06:03):
somebody sitting at the tablehelping to make a decision.
I'll also point to some of ourcommonly used things like the
CAPM (Capital Asset PricingModel), F fama and French
factors.
If we point to the behavioralfinance loss aversion and
prospect theory.
We have to thank some academicsfor those topics that we all
typically employ.

Tanya Suba-Tang (06:20):
So these are some really interesting thoughts
.
So thank you for sharing thosegreat points to consider.
So now you know for listeners,share some actionable items and
takeaways or concluding thoughts.
You know whether you're aseasoned practitioner, academic,
or even maybe a listener tryingto decide which direction
they'd like to go to.
What can you give us?

Dr. Matthew Faulkner, CFA (06:38):
Yeah, certainly.
I think that's a great question.
That's a fantastic way to wrapup is to share some actionable
insights, and I'll call themfood for thought as well.
How can we work together?
So I'll point to this asacademics, we train students.
So if you're a practitioner,share your ideas and your
experiences with professors,whether in your local area or

(07:00):
via a Zoom meeting that they canemploy in their courses.
Right, make them aware ofwhat's going on in practice.
To combine these theories withthe real world experiences
you've lived, I would sayconsider academics on board of
directors, boards of trustees.
That alternative perspective,the deep dives, the questioning
everything can prove useful inthe group setting to help find

(07:22):
the best answers and solutions.
I'll point to a lot ofpractitioners and their
companies.
Maybe a little broader, go tojob fairs and I will say a
fantastic I don't want to saycheap, but cheap recruitment
tool of human capital is if younetwork with the professors, you
can discuss with them when youhave job openings of any

(07:43):
students you think would befitting for these jobs.
That is a way, more costeffective way to get human
capital than to have toarbitrarily set up a table at a
university.
I think guest lecturing isawesome.
My students love it when aguest lecturer stops in and
comes in for the 40 minutes andtells their journey.
Our field, the finance field,financial markets, broader
economics, accounting it's vastand at many times opaque,

(08:06):
especially in the classroomsetting for students.
So share your journey.
Ask the professor if you canstop by and share your
experiences.
It's fantastic.
I love having it.
The students love having it.
So, to wrap up, maybeactionable takeaways for
practitioners working withacademics consider inviting them
to your picnic table.
Bring them along, share thetable with them, ask for some of

(08:28):
their thoughts and insights.
Obviously, if others have morethoughts, suggestions or
questions, I'm more than happyto talk about this and I'm sure
there's ways they can contactthe CFA Society to find out more
.

Tanya Suba-Tang (08:39):
Well, thank you , Matthew.
Thank you for Food for Thought.
It was really great speakingwith you.

Dr. Matthew Faulkner, CFA (08:43):
Tanya .
Thank you for having me.

Lindsey Helman (08:52):
Thank you for listening to the season four
finale of the CFA Society SanFrancisco podcast.
We hope you enjoyed theengaging discussion.
Join us this upcoming Augustfor the season five premiere.
This podcast is produced by CFASociety San Francisco, a
not-for-profit professionalassociation providing
professional learning and careerresources to over 13,000

(09:13):
investment industryprofessionals worldwide.
To learn more about CFA SocietySan Francisco, visit our
website at cfa-sf.
org or connect with us onLinkedIn.