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From the Editor:

December 2005

Dear Financial Decisions Readers:

 Welcome to the Fall 2005 issue of Financial Decisions. We are working hard to continuously improve the quality of the journal and, thanks largely to your willingness to submit quality manuscripts; the work that we publish continues to be of very high quality. For this issue of the Journal, I have selected six excellent manuscripts that I hope that you will find beneficial. 

  • The first manuscript, “Agency Costs, Leverage, and Corporate Social Responsibility: A Test of Causality,” is timely and uses agency relationships to document a causal relationship between corporate social responsibility and debt costs.
  • The second manuscript, “Earnings Management: Do Large Investors Care?” contributes to the literature by documenting the effect of earnings management activity on institutional investor ownership especially by distinguishing the ownership changes in response to the direction of earnings management efforts.

·        The third manuscript, “An Examination of Potential Bias in the Stock Ratings of Investment Bank Research Analysts,” examines the stock picks of sell-side securities analysts and compares them with those of independent analysts to determine whether bias exists in the recommendations of the former.

  • The fourth manuscript, “Modeling Hedge Fund Returns,” models hedge fund returns using macroeconomic factors to test for the commonality of factors with the mutual fund industry.
  • The fifth manuscript, “Capital Budgeting When Projects Have Unequal Lives and Costs of Capital,” suggests a more comprehensive and realistic methodology for project evaluation and selection in the situation complicated by differing project life and costs of capital.
  • The final manuscript, “Conflict in Whispers and Analyst Forecasts:  Which One Should Be Your Guide?” examines the market reaction to conflicts that arise when analyst forecast errors are positive (negative) and whisper forecast errors are negative (positive).

I sincerely hope that you find the manuscripts published in Financial Decisions interesting and useful. I also hope that you will continue to submit your research to us for evaluation, and look forward to many outstanding manuscripts.

Sincerely,

Ronnie J. Clayton
Editor, Financial Decisions
Eminent Scholar and Professor of Finance
Jacksonville State University