FMA is pleased to announce the appointment of Betty Simkins (Oklahoma State University), Ramesh Rao (Oklahoma State University), and Charles Smithson (Rutter Associates) for a three-year term as co-editors of the Journal of Applied Finance ( JAF ).

Spring/Summer 2008 Issue

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We are delighted to be the new editors for the Journal of Applied Finance ( JAF ). We want to thank Keith Howe and Ali Fatemi for their contributions to the journal as the prior editors; and we also thank the prior editorial board for their service to JAF .

Goals for JAF

Our goal is for the JAF to be a leading journal that bridges the gap between practitioners and academics. Solid scholarship and clear writing are necessary conditions for a paper to be published in the JAF ; another requirement is that the paper be relevant to practitioners. If we are successful, articles published in JAF will help practitioners work smarter and will provide academics with ideas for research and real-world applications for their classes.

Regular features will include academic papers, practitioner contributions, roundtable discussions, case studies, survey and synthesis articles, interviews, and book reviews. We are particularly interested in survey and synthesis articles that provide the reader with an understanding of the current state of theory, empirical evidence and practice in a particular area. In that vein, we are also interested in clinical papers or case studies that describe specific events/actions or tutorials that make techniques or methods more accessible. We will actively support (and in some cases will sponsor) roundtable discussions involving both corporate executives and academics and surveys of practice. Finally, we plan to include reviews of professional business/finance books that are of interest to both academics and practitioners (i.e., not textbooks). If you wish to contribute to any of these special areas, please contact us and we will be happy to discuss this further.

The preceding should not be taken to imply that we are not interested in academic research papers, because we are as long as the papers are relevant to practitioners. In line with our goal for the JAF , we are more interested in papers with novel ideas than in papers that provide more weight to widely-accepted ideas. To accomplish this, we plan on nurturing papers that suggest novel ideas, with enough empirical evidence to suggest that the idea might ‘hold water’. We will also solicit papers from recognized experts that challenge existing ideas and/or practices. Given our mission of appealing to both academics and practitioners, we will only consider pedagogy papers that are relevant to both audiences (i.e., pure classroom pedagogy papers will not be considered).

Regarding our handling of manuscripts, we have established a 2-stage review process where manuscripts are “desk reviewed” by two co-editors or a co-editor and an associate editor. Manuscripts that pass the first stage are sent for a full review. If a manuscript is not sent for full review, the submission fee is refunded. This decision is usually made within two weeks of the submission. We expect full reviews to take approximately three months. To encourage prompt review turnaround time, we have increased the honorarium to $70 for reviews completed within one month.

One of our goals is to have one or two themes in each issue of current interest to the finance profession. For example, in our first issue, we emphasize the subprime crisis and risk management. For a few articles published in JAF , we will also have videostreaming files of roundtable discussions and interviews posted to FMA Online. In the future, we plan to have web discussions on selected articles so that people who want to debate or comment will have a forum to do so.

We welcome our new associate editors who will be helping us achieve our goals for JAF . Our editorial board consists of 19 academics and 8 practitioners. We also welcome Courtney Conners as the new managing editor for JAF and thank her for her editorial assistance in getting this first issue ready and handling the publication process. Heidi Carter is our editorial assistant at Oklahoma State University and we are delighted she has agreed to help us manage the submission process.  Next, we summarize the articles in our first issue.

In This Issue

This issue includes two articles on the subprime crisis -- “The Summer of '07 and the Shortcomings of Financial Innovation” by Joseph Mason and “The Sub-prime Crisis Down Under” by Christine Brown and Kevin Davis – and we have included a timeline of the subprime crisis that readers should find of interest as a useful backdrop to these two articles.

Related to the subprime theme is an interview with Steven Ludsin about the early days of the mortgage backed securities (MBS) market and lessons the rest of us should have remembered (“Early Days of the MBS market”). A videostreaming presentation of this interview is available in the current issue of FMA Online and will be kept in an archive on JAF ’s website.

In the area of risk management, we have four contributions. Two focus on enterprise risk management-- a survey article (“Who Reads What Most Often? A Survey of Enterprise Risk Management Literature Read by Risk Executives” by John Fraser, Karen Schoening-Thiessen, and Betty Simkins) and a roundtable discussion (“Enterprise Risk Management: Current Initiatives and Issues” with panelists Bruce Branson, Pat Concessi, John Fraser, Michael Hofmann, Bob Kolb, Todd Perkins, and Joe Rizzi, and moderated by Betty Simkins). The other risk management articles are a case study on the Amaranth hedge fund debacle (“A Case Study on Risk Management: Lessons from the Collapse of Amaranth Advisors L.L.C.” by Ludwig Chincarini) and a practitioner’s perspective on currency risk (“Hedging Currency Exposures by Multinationals: Things to Consider” by Ira G. Kawaller).

This being an election year, we think our readers will find the article “The Response of US Equity Values to the 2004 Presidential Election” by Michael Ferri very interesting. Also included is another roundtable article (“U.S. Corporate Governance: Accomplishments and Failings -- A Discussion with Michael Jensen and Robert Monks” that is moderated by Ralph Walkling) that was first published in the Journal of Applied Corporate Finance. We thank Don Chew with Morgan Stanley for allowing us to reprint this discussion by leading authorities on corporate governance. A videostreaming presentation of this roundtable discussion, which was held at the 2007 FMA Annual Meeting, is available in the current issue of FMA Online and will be kept in an archive on JAF ’s website. We have two articles on option pricing, one by an academic (“A Synthesis of Binomial Option Pricing Models for Lognormally Distributed Assets” by Don Chance) and one authored by a practitioner (“ESOs for CFOs: Pricing Employee Stock Option Grants” by George Oldfield), and an article on portfolio risk measurement (“Mean-Semivariance Optimization: A Heuristic Approach” by Javier Estrada). Our book review in this issue features two books on econophysics and is written by Russell Ray. (Note: A solution to Stewart Myers’ puzzle published in the prior issue will be published in the next issue.)

Our issue concludes with an announcement from PDDARI (Practitioner Demand Driven Academic Research Initiative), an FMA initiative to promote dialogue between academics and practitioners to debate pivotal finance challenges articulated from practitioners’ perspectives.

In Closing

In our next issue, we will emphasize behavioral finance.

We hope you enjoy our first issue as the new editors. Please give us feedback on what you like and, more importantly, what you do not like. If you would like to suggest special topics for future issues, please let us know. We value your input! Our email addresses are provided below.

Sincerely,

Ramesh P. Rao Paul C. Wise Chair Oklahoma State University ramesh.rao@okstate.edu

Betty J. Simkins Williams Cos. Professor of Business Oklahoma State University simkins@okstate.edu

Charles Smithson Founding Partner Rutter Associates LLC csmithson@rutterassociates.com