Relative Significance of Journals,Authors, and Articles Cited in Financial Research

We evaluate journals based on their relative contributions to top-level finance research in a recent period. Journals are ranked according to the number of citations found in articles published in Journal of Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, and Review of Financial Studies. The analysis controls for both the average number of articles and average number of words published annually in each cited journal. We identify the fifty most frequently cited journals during this period. We also list the fifty most frequently cited authors and articles and note topical trends in the research.     

Significant Issues for the Future of Product Innovation

The value of a technology strategy has been increasingly discussed by R&D personnel and those involved in product development and business planning efforts. In this issue Albert Rubenstein and Americo Albala elevate this discussion by showing the importance of preparing a firm to compete by stressing the development of important, relevant technologies. Discovery and development must be channeled into areas that will be needed to support business initiatives likely to occur in the future. Albala stresses the importance of this change for the development of economies in nations that have been disappointed by the lack of success of importing technologies from more developed nations, while Rubenstein maintains that the pace of marketplace change requires a technology strategy in order to reduce the misapplication of scarce resources within the firm and the possibility of being blindsided by competitive developments. These essays continue a year-long series of contributions that the editor-in-chief solicited from members of the editorial board. Members were asked to reflect upon changes and opportunities that they see influencing our profession during the coming decade. Both of these short essays are designed to introduce new perspectives. It is not essential that you agree with the recommendations, but we hope that you are stimulated as you reflect on the issues they raise.     

Relationship of Planning and Control Systems with Strategic Choices: A Closer Look

The study finds that relative to others, firms pursuing the Prospector-like strategy (high innovation) have lower financial results uncertainty, a more long-term orientation for decision making, and more decentralized control. As well, the tightness of budgetary control is found to be negatively correlated with financial results uncertainty. Thus, we are able to reproduce in our study the result that Prospector type firms have tighter budgetary control, which many have found puzzling previously, and point to the relation between strategy and financial results uncertainty as an explanation for the result.Based on a sample of large firms in Singapore, the study also finds the impact of the 1997–1998 Asian crisis is correlated with the intensity with which the Prospector-like strategy was pursued.     

Catching up with the Americans

This paper develops an international version of the consumption-based capital asset pricing (CCAPM), which we refer to as “catching up with the Americans.” Previous CCAPM research develops the concept of “catching up with the Joneses,” where a representative economic agent exhibits higher marginal utility of consumption as a result of higher past per capita consumption in his own country. Catching up with the Americans, on the other hand, is an international habit-preference hypothesis. It extends the idea of catching up with the Joneses by stating that consumers of non-U.S. countries gain higher marginal utility of consumption as a result of higher past American consumption growth. Contrary to much of the CCAPM literature, we test this version of the model using long bond rates rather than equity returns. However, like most of the previous research on the CCAPM, the catching up with the Americans model fails to explain the relationship between consumption and asset returns.     

MODELING THE TERM STRUCTURE FROM THE ON‐THE‐RUN TREASURY YIELD CURVE

We propose a new model to estimate the term structure of interest rates using observed on‐the‐run Treasury yields. The new model is an improvement over models that require a priori knowledge of the shape of the yield curve to estimate the term structure. The general form of the model is an exponential function that depends on the estimation of four parameters fit by nonlinear least squares and has straightforward interpretations. In comparing the proposed model with current yield‐curve‐smoothing models, we find that, for the data used, the proposed model does best overall in terms of pricing accuracy both in sample and out of sample. JEL classification: E43, G12     

Do interventions in foreign exchange markets modify investors' expectations? The experience of Japan between 1992 and 2004

The purpose of this paper is to analyze the impact of the Bank of Japan's official interventions on the JPY/USD parity during the period 1992–2004. The novelty of our approach is to combine two recent advances of the empirical literature on foreign exchange interventions: (i) drawing on over-the-counter option prices to characterize more precisely the distribution of market expectations; (ii) redefining interventions in terms of events as they tend to come in clusters. Moreover, in order to deal with the features of the data (small sample size, non-standard distribution), we use bootstrap tests.We show that interventions have a significant impact on the mean expectation (the forward rate). The results are more ambiguous for variance. Additionally, we find that the effect of interventions on skewness is significant, robust to different definitions of skewness, and consistent with the direction of interventions. On the contrary, our results clearly show that kurtosis is not affected by interventions. We finally show that: (i) coordination increases effectiveness of interventions; (ii) results are not altered when controlling for other economic and political news.     

Understanding the Economic Factors Influencing Farm Policy Preferences

A survey conducted in Mississippi, Texas, Indiana, and Nebraska elicited producers' preferences for various farm policy changes. This permitted examination of the diversity of preferences that single-state studies have not allowed. Five policy choices, including deficiency payments, loan programs, crop insurance, export programs, and disaster payments were examined. Logit model results predicting producer preferences for each of the five dichotomous policy choices are reported. Explanatory variables based on expected utility theory such as risk aversion, price and yield variability, and price–yield correlation are significant in various models.