You know you are a big company when...

The Commerce department breaks out what national income would have been with and without your dividend!!! Wow.

MSNBC - Incomes jumped record 3.7 percent in Dec.: "The Commerce Department reported Monday that the income gain would have been a smaller 0.6 percent in December without the one-time $3 per share dividend payment Microsoft made on Dec. 2."

Primer on Social Security From Cleveland Plain Dealer

Today's Cleveland Plain Dealer has a nice primer on Q&A: Social Security: A few highlights:
"Unlike a private trust fund, which can invest in anything, the money in the Social Security trust fund must be invested only in government securities.....By law, the government is required to repay Social Security all it has borrowed. In practice, the government for several years has been spending way

A look around at a few blogs

The SportsEconomist (with a team of writers now joining Skip in putting out a vastly increased number of posts) has an interesting article reminding us that banks get paid before shareholders. What is interesting is some of the consequences. For instance, the article looks are troubled farms where the farmers are not making any money, but the banks are getting paid. The reason for the article is

Changing times at the NYSE

Speaking at the World Economic Conference in Davos, New York Stock Exchange Chief Executive Officer John Thain confirmed that the NYSE is considering opening 2 hours earlier (at 7:30) in an attempt to capture more European business. (also CNN where Thain states this is not anything new.)

It will be interesting to watch the response of those who work at the NYSE who will most likely be asked to

Excel Smart Tags

A student pointed out today in class the usefulness of Excel Smartags. I had never used them before and was quite impressed.

What are smart tags? From the Microsoft Excel Help file:

"You can save time by using smart tags to perform actions in Microsoft Excel that you'd usually open other programs to perform"
For instance, if you have a spreadsheet that computes market capitalization of a group

Yahoo! 25 Top Jobs for 2005

Yahoo!Finance Special Edition: 25 Top Jobs for 2005

The list is actually compiled by FastCompany. "Fast Company based this year's list of the top jobs on four criteria: job growth, salary potential, education level, and room for innovation."

Drum Roll....the projected top job for 2005 is....Personal finance advisor!

Interestingly, it was the only business job in the top five.

Introducing FinanceJournals.com

I received the following from Jean Heck the Editor of the Journal of Financial Literature

From Jean Heck:

"Want to know who are the most productive finance academics over the
past half-century? The facts can be found in a forthcoming paper in
the new Journal of Finance Literature (JFL). See the rankings of the
most frequent contributors to 72 finance journals over the past 50
years - broken

Maybe fund managers can beat the market afterall. An Analysis of Mutual Funds by Alexander, Cici,Gibson

SSRN-Does Motivation Matter When Assessing Trade Performance? An Analysis of Mutual Funds by Gordon Alexander, Gjergji Cici, George Gibson

Alexander, Cici, and Gibson provide some interesting evidence that mutual fund managers may be better at picking stocks than previous literature has suggested. The authors show that when mutual fund trades are broken down by the motivation for the trade (for

More Banks, Less Crime? The Real and Social Effects of Bank Competition

Garmaise and Moskowitz report that bank mergers are bad for the community. Specifically, bank mergers (and the resulting reduced competition) lead to reduced lending in the community where the banks merged, a weaker local economy, and increased crime.


Longer version:

Who wins and loses in a merger? In class we analyze various stakeholder groups and try to come to a conclusion for each. It is

Story on 1830-1865 US banks using slaves as collateral

Ok, first off, I have to say that slavery is awful and totally inexcusable. As an avid reader of Civil War books and many slave narratives, I am utterly amazed that anyone could have allowed it or worst yet owned slaves themselves. Indeed, it is a major black eye that we ever allowed it. (And if slavery is still around today, we all should work to stop it. )

That said, I was particularly

Value and Duration in Retail Financial Markets: The Economics of Bank Deposits

Value and Duration in Retail Financial Markets: The Economics of Bank Deposits

David Hutchinson in Bquest provides an interesting look at bank deposits and the economics of the retail banking industry. (Yeah I know, some of you doubt whether bank deposits can be interesting. Well surprisingly enough, they can be!)

For instance on the role of the FDIC

"Perhaps the most fundamental difference

The new FMA Online is now available!

YES!! The New FMA Online Journal is now available. It is definitely not like any journal you are used to. It is now almost entirely a video journal.

FMA Online

There are videos from various conference sessions (from Both FMA and Emerging Markets Conference series) as well as a series of articles on how to improve your presentations at conferences.

I am biased as I am an Associate Editor (

LA Times on Investment Activism by state Pension funds

Thanks to the Marginal Revolution for bringing this story to my attention.

Over the past 20 years or so state pension funds have come to play an ever more active role in the stock market. For instance, most of us have heard of Calpers which is the California Public employee Retirement System. Not only do these state funds control Billions of dollars, they are also very active monitors. (For

CFO's top 100 articles

CFO.com is truly a great site. It is the online version of CFO magazine and has several great newsletters (which are free I might add :) ) . In fact one of their free newsletters is what has spurred this post.

The site has a list of the 100 most popular finance articles from 2004. I won't give away the top stories, but I will say that there are many very good articles on everything from what

McKinsey Quarterly Interview with Microsoft's CFO

McKinsey Quartely has a great interview with John Conners the CFO of Microsoft.

Conners lays out why the firm changed its financial reporting, why it both paid a large one time dividend and initiated a buyback plan, and why the firm now uses restricted shares instead of stock options. HIGHLY RECOMMENDED!

A few highlights:


"...we decided against a huge buyback....Our analysis also showed that

Finance Humor from Dilbert

It's Monday and the first Monday of the new school year for us here at SBU, so I figured it would be a good time to start the year off with some humor.

Monday, Tues, and Wed of last week Dilbert had finance ties. Check them out.
Monday Dogbert develops stock picking software.

Tuesday Dogbert adds features and "tests" the software.

And Wednesday Dogbert justifies "scamming innocent

The New York Times: Paul O'Neill: Who Wants to Be a Millionaire?

I should admit I am biased because I am a fan of Paul O'Neill. So today's NY Times OP/Ed piece by him had my interest from the start.

Below are some highlights of his plan to save social security.

The New York Times > Opinion > Op-Ed Contributor: Who Wants to Be a Millionaire?
"We should ask ourselves what would be a worthy aspiration for the financial security of retired Americans in the years

FMA deadline

Just a quick reminder to everyone that today is the deadline for FMA papers. (which also explains why I have not been posting much of late!)

for more information go back to the previous Blog entry.

Lopez-de-Silanes resigns over financial misconduct

I do not know what to say on this story. While I do not know him personally, I have been a fan of much of his work for a while now (indeed, I cited some of his work in my dissertaion). I hope it was all just an honest mistake and that he lands on his feet!

CNN.com - Yale economist resigns over financial misconduct - Jan 11, 2005:
"Florencio Lopez-de-Silanes, a tenured finance and economics

NPR : Examining the History of Social Security

NPR : Examining the History of Social Security

NPR recently had an interesting clip on Social Security. It is pretty short (just over 4 minutes of audio) but does a good job of showing the history of program and the changing life expectancies.

HoustonChronicle.com - Dot-com bubble's legacy: unrealistic expectations

The Houston Chronicle has an interesting look back at the Tech bubble. And lest you think it is all just for historic perspective, remember that many of the students now in finance classes were still in high school and had no interest whatsoever in stocks.

HoustonChronicle.com - Dot-com bubble's legacy: unrealistic expectations

Some of the highlights:
"The Nasdaq is still 58.6 percent off its

SSRN-Are Trading Commissions a Factor in IPO Allocation? by Mahendrarajah Nimalendran, Jay Ritter, Donghang Zhang

What have you done for me lately? Buying favorite status prior to hot IPOs.

SSRN-Are Trading Commissions a Factor in IPO Allocation? by Mahendrarajah Nimalendran, Jay Ritter, Donghang Zhang

Short Version:

How investment bankers allocate hot IPOs is the focus of this paper by Nimalendran, Ritter, and Zhang. The paper presents evidence of abnormally high trading volume in other (non IPO) stocks

Cyberlibris blog: You Enjoy Google Scholar? You Gonna Love SmealSearch!

Cyberlibris blog: You Enjoy Google Scholar? You Gonna Love SmealSearch!

When Eric Briys says something, I listen. Not only is he the author of several books on derivatives and one on International Finance (The Fisherman and the Rhinoceros), he also the person who introduced me to blogging. If not enough, he also runs Cyberlibris which is really cool. It is, as they say "the first digital library

Smartmoney.com: Put Your Savings on Autopilot

A reader reminded me last week that the newsletter used to have more stories that everyone could use and not just about academic finance, so I sort of went looking for a few stories that fit the bill. And this one is an excellent one from SmartMoney.

This is a no brainer. I really think everyone should do it. I do not care if in stocks, bonds, both, or in derivatives and treasuries. Saving

An 8k is more than 5 miles!--a look at 8ks

And I thought an 8k was just short of 5 miles ;)

Transparency is a good thing and increasing. For instance you no longer need to just guess at what benefits the CEO gets? Companies have increased the reporting of these benefits. Where? In their 8Ks,

From: Yahoo! News - Look to 8-Ks for Exec. Benefit Details:
"While the 8-K has been around for years, often languishing in the backwater of

Civil War Finance

The Civil War and Finance? Come on, you knew there was a 100% probability I was going to post this one!

Financing the Civil War: The Confederacy's Financial Strategy by Rose Razaghian

The North and South Used vastly different ways of financing their war efforts. For instance the North borrowed heavily and raised taxes at the Federal Level. The South, on the other hand, for the early years of

Financial Distress can reduce revenues. The USAIR case

In class discussions of financial distress all too often center on higher borowing costs. It is important to note that financial distress can also increase operating costs (who would want to work for a firm that may go out of business?), and reduce revenues.

From the Charlotte Observer:
Charlotte Observer 01/02/2005 An airline in critical condition:

"Nancy Holtzman, executive director of the

Forbes.com on the efficiency of gambling markets

I got an email earlier this week from Forbes and was interviewed for the following article. I am pretty psyched. Even though the article is pretty short, but whenever you get mentioned with people from Chicago and Wharton things can not be all that bad ;). (and of course with people like Rodney Paul and Andy Weinbach, but since I know them they count twice!)

Forbes.com: Five Betting Tips For The

A look around at a few other blogs

It is that time again, time for a quick look around at a few other blogs that I monitor:

At the Marginal Revolution, George Mason's Tyler Cowan informs us of the very sad news that Nobel Prize Winner Gerard Debreu has died. Dr. Debreu will be most remember for his ground breaking work on equilibrium in markets and on utility theories.

Speaking of Nobel prize winners, over at the Becker-Posner

The Fed's role in responding to (and preventing) a financial crisis

FRB:Speech, Kohn--The known, the unknown, and the unknowable--January 6, 2005

Fed Governor Donald Kohn gave an interesting speech today on how the Fed reacts to crises. Some of the high points:

In crises, good information is a valuable (and rare) asset

"As I am sure we will hear time and again today, knowledge--reliable information--is essential to managing risks. In a financial crisis,

Portfolio optimization made doable or at least more doable

Brandt, Santa Clara, and Valkanov have an interesting working paper that should help investors create optimal portfolios.

I will let them explain their paper:
"We propose a simple new approach to equity portfolio optimization based on firm
characteristics. We parameterize the weight invested in each stock as a function of the firm's characteristics, with the implicit assumption that these

It is not a level field---Tipping by Irvine, Lipson, & Puckett

SSRN-Tipping by Paul Irvine, Marc Lipson, Andy Puckett

No we are not talking what you leave at restaurants. Tipping here is the idea of giving stock tips to select customers prior releasing the recommendation to all of their clients. It is important to realize that tipping is not illegal. While some brokerage firms have rules against it, tipping in and of itself is not illegal.

Irvine, Lipson,

Han and Wang--Constraints, Efficiency, and Profits from Momentum Investing

What a great way to kick off the new year! This one definitely qualifies as I^3 (interesting, informative, and important)

Super short version: Han and Wang have an interesting paper that examines the “impact of institutional investment constraints.” Their finding (that these constraints play an important role in the pricing of securities), gives us a much better insight into both institutional

Paper Submission deadlines

With the American Finance Association's (AFA) annual meeting upon us, it is a good time to remind people that the deadline for submitting papers to the Financial Management Assocation (FMA) 2005 meeting is rapidly approaching.

The FMA Meetings are in Chicago this year. The deadline for submission is January 14, 2005. Papers should be submitted in pdf format through the FMA website. Don't forget!

Google Scholar---should help research at small schools!

Google Scholar

Not sure if you have seen this or not, but Google has added a pretty useful site to search only for academic articles It also gives an approximate number of papers that cite the article.

There are better academic sites, but they are generally rather expensive and often only available through universities. Google's new site should make research at small colleges and

Happy New Year!

Before getting back to work this week, I wanted to wish you all a very happy, healthy, and prosperous 2005!

Here is past list of financial resolutions that I suggested would be fitting to almost all:

1. I will take an honest account of my spending habits, my net worth, and my investment goals.
2. I will let the power of compounding work for me and not against me by investing more and by