Bringing High Finance Down to Earth
If a tree falls in a forest, does it make a sound? If that tree is pulped into the pages of an academic journal focusing on finance, then no, it does not. Outside the corridors of academia, precious few humans actually read the contents of publications such as the Journal of Finance, the Accounting Review, and the Journal of Financial and Quantitative Analysis, to pick on a few. That’s too bad, given how hard scholars work on their submissions and how diligently editors referee the ideas inside. Bhagwan Chowdhry, a professor of finance at the University of California at Los Angeles’s Anderson School of Management, is attempting to alleviate the problem with a new periodical that gathers the most accessible articles from established journals, distills them to just a few pages, and repackages them for a (slightly) wider audience.
The quarterly digest goes by the unwieldy title of FAMe jagazine, short for finance and accounting memos journal-magazine. Two issues have been published so far, with about 20 synopses in each. Chowdhry says he printed 10,000 copies and mailed them to business schools and libraries. He invites researchers whose papers have been recently accepted by established, peer-reviewed journals to refashion their work for FAMe’s intended readership of “interested and smart nonacademics,” such as policymakers and journalists. This lay audience gets clearer prose, fewer equations, and a useful sampling of what the ivory tower is up to; academics get visibility and citations, and a chance to revivify papers that have been through the editorial wringer.
A scholarly article typically takes years to progress from idea to printed page. “We write them, we keep revising them, make them more and more and more rigorous, and finally they’re published,” Chowdhry says. “They’re totally antiseptic. There’s no taste left to it.” He adds of his own experience, “By the time it’s ready, I don’t want to see it myself. I’m serious. I just want to move on to the next idea.”
He hopes his jagazine will change the scholarly dynamic by appending an approachable précis at the end of the process. FAMe’s first issue includes pieces on insider trading, hedge funds that invest in bankrupt companies, and whether stocks are really less volatile over long periods.
There are limits to just how accessible FAMe can get. One piece, titled “General Equilibrium With Heterogenous Participants and Discrete Consumption Times,” is about how economic conditions affect interest rates. But a 900-word article on stock analysts demonstrates the reader-friendly approach. “It turns out that being wrong may be the right career move for financial analysts who want to move stock prices and markets while also moving up the professional ranks,” the piece begins. That’s a lot more digestible than the original: “We show empirically that analysts who display more consistent forecast errors …”
“I’ve already told a number of my MBA students about this jagazine,” says Lubos Pastor, a finance professor at the University of Chicago’s Booth School of Business, who co-wrote the lead article for the inaugural issue. “This is what I would recommend for them to read after they graduate.”
An annual print subscription costs $50, though FAMe is available free online. Ten of the 14 members of the publication’s editorial board are affiliated with UCLA’s Anderson School, but FAMe is produced independently. Each issue costs $50,000 to create, Chowdhry says, mostly for printing and mailing charges.
Research Affiliates, a Newport Beach (Calif.) firm that develops investment strategies for retail and institutional clients, sponsors the publication with a back-page advertisement. “We feel like it’s a nice way to pay back this society,” says Feifei Li, RA’s head of research. The firm’s strategies, used by clients overseeing $169 billion, draw heavily on the latest academic research. “Because academic papers are written in certain ways, it’s actually difficult for just the average industry person to comprehend,” Li says. “Even for myself—I have my Ph.D. from the UCLA finance department, and sometimes a paper can take me two days to fully digest.”
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