Front Matter Source: Financial Management, Vol. 8, No. 4 (Winter, 1979), pp. 1-6 Published by: Wiley on behalf of the Financial Management Association International Stable URL: http://www.jstor.org/stable/3664873 . Accessed: 18/06/2014 04:24 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Wiley and Financial Management Association International are collaborating with JSTOR to digitize, preserve and extend access to Financial Management. http://www.jstor.org This content downloaded from 185.2.32.49 on Wed, 18 Jun 2014 04:24:46 AM All use subject to JSTOR Terms and Conditions
Transcript
Front MatterSource: Financial Management, Vol. 8, No. 4 (Winter, 1979), pp. 1-6Published by: Wiley on behalf of the Financial Management Association InternationalStable URL: http://www.jstor.org/stable/3664873 .
Accessed: 18/06/2014 04:24
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp
.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].
.
Wiley and Financial Management Association International are collaborating with JSTOR to digitize, preserveand extend access to Financial Management.
http://www.jstor.org
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. Financial Management (ISSN 0046-3892) is the journal of the Financial Management Association, an affiliate of the Finman Corporation. It is published quarterly. See publishing schedule and deadlines below. The Editors and the Association assume no responsibility for views ex- pressed by the authors.
* Membership dues of the Association include a one-year subscription to the journal. Individual rates are: Regular $20; Sustaining $25; Stu- dent $10. Corporate, governmental, or institutional membership is $100 (all rights and privileges); 3 individuals may receive mailings. Library subscriptions are $30 per year. Members outside the U.S. and Canada add $2 per year to cover overseas postage. All fees must be in U.S. dollars. See pages 5 and 6.
. Memberships, subscriptioffs, and address changes: Write John A. Boquist, Executive Director, FMA, Graduate School of Business, Indiana University, Bloomington, Indiana 47401.
. Manuscripts: Send to Richard S. Bower and Dennis E. Logue, Co-Editors, Amos Tuck School, Dartmouth College, Hanover, New Hampshire 03755. A submission fee is required for evaluation of each manuscript considered, $20 for non-FMA members and $10 for FMA members (U.S. dollars). Style information for manuscripts is at the back of this journal. . Permission to Quote or Republish: Write Richard F. Wacht, Coordinating Editor, College of Business Administration, Georgia State University, Atlanta, Georgia 30303.
. Advertising Rates and Requirements: Write Patricia B. Peat, Managing Editor, Amos Tuck School, Dartmouth College, Hanover, New Hampshire 03755.
. Publishing Schedule and Deadlines: Financial Management is published on March 15 (Spring), June 15 (Summer), September 15 (Autumn), and December 15 (Winter). Deadlines for receipt of meeting announcements, calls for papers, or positions available are: January 15 (Spring), April 15 (Summer), July 15 (Autumn), and October 15 (Winter). Announcements received after these deadlines will be printed in the current issue if at all possible or will be printed in the next following issue if appropriate. (These deadlines do not apply to camera-ready copy for adver- tisements. Advertisers please direct queries to the Managing Editor.) . Copyright ( 1979 by the Financial Management Association, an affiliate of the Finman Corporation. Composed and printed by Dartmouth Printing Company, Hanover, N.H. Second class postage paid at Bloomington, Indiana, and additional mailing offices.
President
President-Elect
Vice President- Annual Program
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Richard S. Bower Dennis E. Logue Amos Tuck School of Business Administration
Dartmouth College Hanover, New Hampshire 03755
COORDINATING EDITOR
Richard F. Wacht College of Business Administration
Georgia State University
MANAGING EDITOR
Patricia B. Peat Amos Tuck School
603/646-2002
ASSOCIATE EDITORS
Peter W. Bacon Wright State University
Christopher B. Barry University of Texas, Austin
Kerry Cooper Texas A&M University
David H. Downes University) of California, Berkeley
David Durand Lexington, Massachusetts
M. Chapman Findlay, III University of Southern California
Joseph E. Finnerty University of Massachusetts
H. Russell Fogler University of Florida
Jack Clark Francis Bernard Baruch College
Ian H. Giddy Columbia University
Robert R. Glauber Harvard University
George W. Hettenhouse Indiana University
Roger G. Ibbotson University of Chicago
Vincent M. Jolivet Consultant
John J. McConnell Purdue University
Ronald W. Melicher University of Colorado
Howard H. Newman Morgan Stanley & Company, Inc.
George S. Oldfield Cornell University
Donald H. Peters EG & G, Inc.
John J. Pringle University of North Carolina
Frank K. Reilly University of Illinois, Urbana
Richard J. Rogalski Dartmouth College
Lemma W. Senbet University of Wisconsin, Madison
Joel M. Stern Chase Financial Policy
Hans R. Stoll University of Pennsylvania
Bernell K. Stone Georgia Institute of Technology
Alex O. Williams University of Virginia
James L. Pappas University of Wisconsin, Madison
CONTRIBUTING EDITOR
John J. Clark Drexel University
INSTITUTIONAL MEMBERS
SPONSORS
Dartmouth College University of Delaware Indiana University
Arkansas Public Service Commission Babson College Graduate Program Beatrice Foods Company Castle & Cooke, Inc. Chase Manhattan Bank Merrill Lynch, Pierce, Fenner & Smith, Inc. Morgan Guaranty Trust Company Sam Houston State University Student Loan Marketing Association
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12 Hedging Possibilities in the Flotation of Debt Securities
Victor L. Andrews
Richard W. McEnally Michael L. Rice
When a firm decides to issue debt securities, typically there is a time lapse of 12 weeks or more between the decision to issue and the date the securities come to market. This paper examines and tests strategies to hedge the interest rate risk faced by corporate borrowers with interest rate futures contracts.
19 Effects on the Credit Markets of the Abolition of Holder-in-Due-Course
Nancy R. Burstein
This paper describes explicitly the effects on the consumer credit market of the Trade
Regulation Rule on the Preservation of Consumer's Claims and Defenses. The author summarizes the costs and benefits of the Rule for consumers, merchants, financers, and poor people, concluding that the benefits of the FTC Rule may be less than hoped for.
28 The Personal Investments of Professional Managers Wilbur G. Lewellen Ronald C. Lease
Gary G. Schlarbaum
Empirical examination of the personal investment portfolios of a large sample of individual investors indicates that, in a number of respects, business executives differ from other investors in their approach to portfolio management. The rates of return they earn on their portfolios, however, are no better than average.
37 A Reliable Framework for Monitoring Accounts Receivable
Michael D. Carpenter Jack E. Miller
This paper develops and illustrates a framework of accounts receivable analysis that is based on a weighted days sales outstanding, independent of both the sales-averaging period.and the pattern of sales. The framework provides a more complete and
meaningful summary of a company's collection experience than do current measures of performance.
41 The Sensitivity of Earnings Per Share Growth to Some of Its Financial Components
Gary P. Spraakman
This paper develops a model to help financial managers and investment analysts express earnings growth in terms of five financial variables: return on investment, in- terest rate cost of debt, leverage, payout ratio, and income tax rate. The author uses financial data from four firms to demonstrate how alterations in one factor may affect
earnings per share growth.
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47 Leasing, Borrowing, and Financial Risk Haim Levy Marshall Sarnat
This paper analyzes long-term financial lease contracts and presents an operational solution to the practical problem of neutralizing the risk differential induced by lease contracts. This involves specifying the cash flows of the two alternatives, holding risk constant. A numerical example demonstrates the technique.
55 Debt Capacity and the Capital Budgeting Decision: James M. Gahlon A Caveat Roger D. Stover
Recent articles in this journal have proposed different approaches to account explicitly for the value of a project's contribution to the firm's overall debt capacity in the capital budgeting decision. These approaches focus on only one additional invest- ment project and its effect on the overall debt capacity of the firm. This paper, however, demonstrates that failure to incorporate the effect of correlations among the cash flows of all proposed projects may lead to incorrect capital budgeting decisions.
60 The Bond Issue Size Decision Revisited Edward A. Dyl William J. Sawaya
The traditional economic order quantity (EOQ) formulation of the bond issue size problem assumes constant debt needs per period. This paper presents an alternative decision procedure that provides more efficient decisions than the EOQ formulation when debt needs are growing or are otherwise irregular.
68 On Portfolio Theory, Holding Period Assumptions, H. Robert Magee and Bond Maturity Diversification Gordon S. Roberts
Portfolio theory should have practical applications for investors in government bonds as well as equity investors. Recent research, however, finds that maturity diversifica- tion in government bond portfolios is of only limited value. This paper argues that the choice of restricted holding periods may have been responsible for such findings, and the authors propose an approach that frees future research from the handicap.
72 The Impact of Listed Options Samuel L. Hayes, III on the Underlying Shares Michael E. Tennenbaum
The statistical tests discussed in this paper indicate that listed options increase the volume of trading in the underlying shares and enhance price continuity by lowering volatility. Several Chicago Board Option,s Exchange studies are analyzed, along with the results of a mail survey conducted by the authors.
78 Index to Volume Eight
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No journal could exist without the contributions of reviewers. Our anonymous reviewers have been particularly helpful to the editor and to those who have submitted papers. They have also been unrewarded and often un- acknowledged. This list includes all of those who have contributed as reviewers during the twelve months before this issue went to press. We owe them our thanks. Any omissions are inadvertent. Readers interested in refereeing papers in specific areas are invited to let us know.
James Allwin Edward I. Altman Paul F. Anderson Victor L. Andrews Robert N. Anthony Stephen H. Archer Gert Assmus Joseph C. Atkins Harvey Babiak Donald E. Baer Amir Barnea Brit J. Bartter Thomas H. Beechy Moshe Ben-Horim George Benston William Beranek Roger P. Bey James L. Bicksler Harold Bierman, Jr. John S. Bildersee John M. Blatt Steven Bolten John F. Boschen Kenneth J. Boudreaux Oswald D. Bowlin Ben Branch Menachem Brenner Eugene F. Brigham Lawrence D. Brown William B. Brueggeman William G. Burns Michael C. Burstein John Caks Tim S. Campbell Willard T. Carleton Robert C. Carlson E. Eugene Carter Kalman J. Cohen Bradford Cornell Thomas J. Coyne Timothy R. Crichfield Roy L. Crum John F. Curley William W. Damon William H. Davidson Francis E. Derrick Gordon Donaldson Thomas F. Doyle D. H. Drury Rodney F. DuBois Edward A. Dyl Robert A. Eisenbeis J. Walter Elliott Douglas R. Emery Donald E. Farrar Bruce D. Fielitz James L. Flynn Martha C. Fransson Jack E. Gaumnitz James A. Gentry Lawrence J. Gitman Michael J. Gombola William M. Goodyear Kenneth B. Gray, Jr. Willis R. Greer Bulent Gultekin Robert S. Hamada Diana R. Harrington K. Larry Hastie
Robert A. Haugen Glenn V. Henderson John W. Hennessey Charles N. Henning Anthony F. Herbst Robert C. Higgins Ned C. Hill Gailen L. Hite Duncan M. Holthausen Michael H. Hopewell John S. Hughes Jonathan Ingersoll Ali Jahankhani Jeffrey E. Jarrett James W. Jenkins Ramon E. Johnson Robert W. Johnson O. Maurice Joy A. J. Kalotay George G. Kaufman Michael Keenan Yong H. Kim Thomas P. Klammer Robert C. Klemkosky William J. Kneisel W. D. Knight Steven W. Kohlhagen Gene Laber James A. Largay Cheng-few Lee Sang M. Lee Wayne Y. Lee Richard M. Levich Wilbur G. Lewellen John R. Lindvall Charles M. Linke Dennis G. Little Peter A. Lusztig Landon McDonald Victor E. McGee James D. Macbeth John H. Makin Gershon Mandelker John D. Martin Stanley A. Martin L. J. Merville Edward M. Miller James R. Morris R. Charles Moyer Roger F. Murray, 2d Stewart C. Myers Thomas S. Myers Timothy J. Nantell Robert M. Nauss Scott A. Neslin Kenneth Nunn James M. O'Brien Kenneth M. O'Brien John S. Oh Robert A. Olsen Daniel Orr Jerome S. Osteryoung Michael Parkinson Wayne F. Perg Dennis E. Peseau H. Craig Petersen R. Richardson Pettit George C. Philippatos
George E. Pinches John M. Pinkerton R. Burr Porter John W. Pratt Donald J. Puglisi George A. Racette Vithala R. Rao Alfred Rappaport Richard F. Raubertas Patrick J. Regan Raymond R. Reilly Richard J. Rendleman, Jr. Michael L. Rice Kenneth D. Riener Gordon S. Roberts Rita M. Rodriguez Rodney L. Roenfeldt Gary M. Roodman Alan M. Rugman Douglas A. Rupert David F. Rush David P. Rutenberg Anthony M. Santomero Lawrence D. Schall John T. Schiffman D. N. Schuchardt Evan Schulman Eduardo Schwartz David F. Scott, Jr. Elton Scott James Scott John T. Scott Alan C. Shapiro Francis X. Shea J. B. Silvers Seymour Smidt Dan Throop Smith Keith V. Smith Robert M. Soldofsky Ivar W. Sorensen Chester Spatt James McN. Stancill Clyde P. Stickney Gary L. Sundem Robert A. Taggart Howard E. Thompson Seha M. Tinic Robert R. Trippi Charles W. Upton Robert F. Vandell James Vander Weide James A. Verbrugge Edmond D. Villani Joseph D. Vinso Jerry A. Viscione Tirlochan S. Walia Ernest W. Walker Edward L. Walls, Jr. Curtis R. Welling Richard R. West J. Fred Weston Robert J. Wiley Arthur Williams II J. Peter Williamson Dwayne Wrightsman Jess B. Yawitz Charles W. Young Raymond A. Young. III
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THE FINANCIAL MANAGEMENT ASSOCIATION The Financial Management Association was founded in 1970 to serve as a vehicle for focusing attention of the academic
community on problems that confront financial managers. Today FMA brings together more than 2,500 members from the business, not-for-profit, government, and academic worlds with common interests in financial analysis and decision making. We seek to develop a continuing relationship among financial practitioners, professors, and financial researchers in order to encourage free exchange of ideas, techniques, and advances in the field. Membership entitles you to receive the quarterly journal, Financial Management. Our authors report on and refine the most advanced academic research and review developments made by practitioners. The organization of the Financial Management Association encourages participatory interaction; association officers and leaders of colloquia in the annual meeting are drawn from both practitioners and academicians to ensure that we actively work toward our objective of a beneficial interface between theory and practice. We encourage you to join and contribute to our growing organization.
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Please make checks in U.S. dollars payable to the FINANCIAL MANAGEMENT ASSOCIATION. Postage outside the U.S. and Canada $2 additional. Dues include a one-year subscription to the quarterly publication, Financial Manage- ment. Back issues are available for $5 a copy (U.S. dollars).
Please fill in your name and mailing address as you would like it to appear. Applicants are encouraged to use their office address to provide information on their professional affiliation.
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Professor John A. Boquist Graduate School of Business Indiana University Bloomington, Indiana 47401
5
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An institutional membership is recorded in the name of the company or agency. Please make checks in U.S. dollars payable to the FINANCIAL MANAGEMENT ASSOCIATION. Institutional dues allow 3 individual memberships with all rights and privileges, including one-year subscriptions to the quarterly publication, Financial Management. Back issues are available at $5 a copy (U.S. dollars).
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