V O LU ME 3 1

N UMB ER 4
FA L L 2 0 1 9

Journal of

APPLIED
CORPORATE FINANCE
IN THIS I SSU E:

The Fed 10 Hamilton and the U.S. Financial Revolution

Richard Sylla, New York University and NBER, and David J. Cowen, Museum of American Finance

and the 16 A Limited Central Bank

Charles I. Plosser, Former President and CEO, Federal Reserve Bank of Philadelphia

Financial 21 How to Promote Fed Independence:

Perspectives from Political Economy and History

System 43
Charles W. Calomiris, Columbia University and The Hoover Institution

The Great Crash of 1929: A Look Back After 90 Years

Robert F. Bruner, University of Virginia, and Scott C. Miller, Yale University

59 The Strange and Futile World of Trade Wars

Steve H. Hanke and Edward Li, Johns Hopkins University

68 Monetary Policy Implementation: Making Better and

More Consistent Use of the Federal Reserve’s Balance Sheet
Peter N. Ireland, Boston College and the Shadow Open Market Committee

77 The Fed’s Communications: Suggestions for Improvement

Mickey D. Levy, Berenberg Capital Markets

86 FinTech, BigTech, and the Future of Banking

René M. Stulz, The Ohio State University

98 Will Blockchain Be a Big Deal? Reasons for Caution

Craig Pirrong, University of Houston

105 Two Modes of Investment Banking:

Technocrats, Relationship Managers, and Conflict
Alan D. Morrison and William J. Wilhelm, Jr., University of Oxford and University of Virginia

118 Dividend Consistency: Rewards, Learning, and Expectations

David Michayluk and Scott Walker, University of Technology Sydney,
Karyn Neuhauser, Lamar University

129 The Reference-Driven College Paper

(Or Why Your Students Should Read the JACF)
Joseph W. Trefzger, Illinois State University
The Reference-Driven College Paper
(Or Why Your Students Should Read the JACF)
by Joseph W. Trefzger, Illinois State University
1964 Harvard Business Review article cited poor written communication as a
A widespread problem in American business, while identifying skillful writing as
upwardly mobile executives’ most essential attribute.1 The author’s warning that “new data
processing machines” would not improve writing output shows that misgivings over strug-
gling writers’ search for automated solutions long predate grammar and spelling checkers.
A half century later the problem is not only still with us, but
may have gotten worse. Almost 90% of the finance, insurance,
and real estate (FIRE) companies responding to a 2016 survey
reaffirmed a 2004 College Board study’s findings that work-
ers, especially new hires, are often deficient in writing and that
poor writing gets in the way of being hired and promoted in
most major organizations.2 Hiring managers lament the disap-
pointing writing seen even in the resumes and cover letters
submitted when college seniors apply for jobs and should be
putting their best literary feet forward.3 If flawed business
writing follows naturally from practices new graduates bring
to the workplace, the challenges will not diminish in a world
where the young increasingly think of written communica-
tion in terms of tweets and texting acronyms, and where the
need to bolster student writing fundamentals through writing-
intensive courses and writing across the curriculum continues
to receive serious attention on campuses nationwide.
Yet addressing student writing in the higher education
setting is not an issue of organization, sentence structure,
word usage, and punctuation alone. Even a paper written well
mechanically is of limited educational value if the activity does
1 John Fielden, “What Do You Mean I Can’t Write?” Harvard Business Review,
May-June 1964, pp. 144-157.
2 What’s more, almost half of the 71 total responding businesses said they provide
some writing training; and when the researcher applied the $1,092 yearly per-employee
average indicated by the 16 firms that reported costs to applicable 2014 Bureau of La-
bor Statistics employment figures, he came up with an annual U.S. cost of bad writing
in excess of $5 billion. See Clay Aschliman, Write to Work: The Use and Importance of
Writing as Perceived by Business Leaders. Dissertation, Virginia Commonwealth Univer-
sity, December 2016.
3 See Kaleigh Moore, “Poor Writing Skills Are Costing Businesses Billions,” Inc.,
March 31, 2016. https://www.inc.com/kaleigh-moore/study-poor-writing-skills-are-cost-
ing-businesses-billions.html.
Journal of Applied Corporate Finance • Volume 31 Number 4 Fall 2019
not sharpen the student’s thinking abilities. At a time when
many employers and some (especially nontraditional) students
are gravitating toward MOOCs and experiential learning,
traditional classroom education’s primary justification may
be its power to promote “learning to learn” and other facets
of critical thinking.4 Developing students’ thinking skills is
especially important amid today’s complex markets, where
judgment and decisive leadership are needed and there is not
always a playbook to follow.5 Significant improvements of
critical thinking can be realized just by encouraging students
to read the right kinds of reference material.
One Instructor’s Finance Writing Assignment
Since 2001, I have taught a yearly honors section of the stan-
dard financial management course that is completed by all
majors in almost every undergraduate business program in
the country. At my school, basic “corp fin” is also a course
required for the business administration minor—a program
that draws large enrollments, including a fair share of honors
students, from academic programs across campus. In light
of the manageable class size in the 30-student range and the
university’s expectation that these students be challenged,
I have always required each of my honors section participants
4 For a nice discussion of the challenges associated with attempting to convey to
students a blend of business theory and practice, see “Texas Roundtable on the Future
of Graduate Business School Education,” Journal of Applied Corporate Finance, Winter
2013, pp. 8-33.
5 Robert F. Bruner, “Crises, Financial Leadership, and the Six Stretches for Financial
Education,” Journal of Applied Corporate Finance, Winter 2017, pp. 15-21. The author
notes how last decade’s financial crisis illuminated the need to move from fact-based
learning and fighting the last war, to interdisciplinary competencies and the wisdom to
adapt to new approaches for solving the most consequential problems.
129
to write a paper on a topic pertaining to financial manage-
ment, markets, or regulations. The two biggest lessons I have
learned over time are that less definitely can be more, and that
the writing exercise is far more meaningful when the papers
are “reference-driven” rather than topic-driven.
“Less is more” needs little explanation. The specified
page count, in my early years, was eight. While that length
never struck me as onerous, the final product rarely contained
the careful analysis hoped for. Despite my warnings, plead-
ings, and explanatory handouts, in the end perhaps three
of a typical submission’s eight pages were substantive, and
the other five consisted of fluffy padding. The fluff included
wordiness, unneeded elementary background information,
and ultimately a long conclusions section that merely repeated
much of what had been presented earlier. The fact that papers
usually account for only 10% of the total semester points may
have tempered enthusiasm to try harder, but I reasoned that
the students were some of our best, and the topics were of
their choosing.
Over time, I have moved from eight required double-
spaced pages to six to four. Class members now are told to
think of the assignment as creating a report for someone who
must become educated quickly about the topic at hand while
headed to a board meeting or press conference. The client has
time to read four pages, but no more, before having to express
ideas and answer questions convincingly; so turning in more
than four pages is penalized rather than praised. Concise and
well-organized presentations demand time and hard work.
A guiding principle should be the recognition, attributed to
the likes of Benjamin Franklin and Mark Twain, that authors
compose long letters mainly because they do not have time to
write short ones.6 Wordy sentences and irrelevancies displace
information that could be important for the recipient to
know; and there is no value, in a brief paper, to a conclusion
that does no more than restate what was encountered just a
page or two earlier. The less lengthy papers generally have
proven to communicate their stories more effectively.
What puzzled me, at first, was why the longer papers so
frequently had lacked substance, when good students were
dealing with topics that were supposed to be of special interest
to them. The length surely was part of the problem; energy
spent simply putting more words on paper can crowd out
reflection and focus. The bigger issue, however, turned out
to be that class members were picking topics the wrong way.
6 Perhaps a more practical remark is that the writer should apply a business per-
spective to writing and not a writing perspective to business; for a persuasive demonstra-
tion of this approach, see Michael Sheldon and Janice Willett, “BIG Writing: The Funda-
mental Discipline of Business Writing,” Journal of Applied Corporate Finance, Summer
2008, pp. 100-106.
130 Journal of Applied Corporate Finance • Volume 31 Number 4 Fall 2019
A typical college junior or beginning graduate student, seeing
systematic coverage of finance concepts for the first time, has
no independent basis for deciding on a sensible paper topic.
The video generation knows how to surf the web for infor-
mation, but may need instruction in knowing what to look
for. By the year 2000, a student could type an interesting-
sounding phrase into a search engine and be led to multiple
references. Too often, though, the choices were from newspa-
pers or magazines, with straightforward coverage that did not
expand students’ thinking, or else from the Journal of Finance,
with lofty content conveying little the young writers would
actually comprehend. There had to be a better method.
The Reference-Driven Approach
The answer is that the process of writing an introductory
finance paper should commence not with a student selecting
a topic, but instead with identifying the right reference mate-
rial for the student to read. Now at the top of the first page
of my handout on writing a paper, in bold italicized print, is
the statement:
A primary component of this assignment is to work with refer-
ence sources that you can understand, but that have gone through
a critical review process, and that are written at a level higher
than were references you may have used in the past. The assign-
ment is not merely to write about a topic that is interesting to you.
The group is regularly reminded that the most important
part of the paper writing assignment is to “read good stuff.”
A later passage in the handout explains that
A key to writing a good paper is to become educated about
a general topic by reading your reference sources thoroughly; tell
yourself an interesting, integrated story that draws from all you
have learned; and then begin putting that story down on paper
for your reader.
So if a student asks, “Can I write about how people
will use Bitcoin at the next Olympics?” I respond by asking
what critical-thinking references will be used; a topic that
merely strikes her fancy may not be feasible for our purposes.
Ideally, the macro topic is identified based on the availability
of sound reference materials relating to a general notion
that appears promising, and then the micro topic emerges as
the student reads, thinks, writes, and refines to stay within
the page limits. As the writer mulls over the things newly
learned, what keeps returning to her thoughts as being the
most compelling; what story would she like to tell the world
in the four allotted pages? There typically should not be
an attempt to determine the precise final topic until after
the selected reference materials have been read, and maybe
not even until after a reasonable amount of time has been
spent writing. The frequent verbal reminder provided is that
“you pick your big topic, let your little topic pick you—or
reveal itself to you.” A student might opt for corporate gover-
nance as the broad topic about which to become educated
after being introduced to some helpful supporting reference
sources. But as she comes to see how vast that subject is, she
tapers the focus of her initial writing to matters of executive
compensation. Only as she further clarifies her thinking and
writing does it become evident that equity-based executive
compensation is the concept most deserving of her analysis
in the limited permitted space.
My general rule for the paper, in its current form, is to
have three or more reference sources, at least two of which
should be from “timeless” critically reviewed, analytical
publications that I approve. Specialized books sometimes can
count as analytical sources—though a book is more defen-
sible as a first-level reference if its author also has written
extensively for outlets subject to refereeing by professional
colleagues. Because the assignment is for a finance course
on a topic connected to financial reasoning, the reference
material should be primarily from authors with expertise in
finance, rather than in fields such as management, law, or
accounting that sometimes deal with related issues. The most
strongly recommended analytical reference material sources
are the Journal of Applied Corporate Finance (JACF) and the
subset of finance articles in the Journal of Economic Perspec-
tives (JEP), two highly credible publications that lean toward
being largely accessible to students’ understanding, and that
I have catalogued to facilitate topic searches.
Most of the articles in these two publications have been
formally vetted for correctness and relevance by experts before
they are printed; their content, in turn, typically counts as
analytical.7 Materials written and critically reviewed by parties
with appropriate expertise are timeless in the sense that the
ideas and thought processes they present usually remain valid
long after they have been drafted. These types of written infor-
mation sources give students the basis to fine-tune their critical
thinking for the analytical portions of their papers. Using
only low-level references typically leads to descriptions and
assertions rather than induction supported by evidence, with
papers no stronger analytically than local newspaper stories.
7 Interviews, roundtable panel discussions, conference reports, and speech tran-
scripts in JACF do not undergo critical review, but because they deliver experts’ candid
views on impactful topics, their use as second-level reference sources is encouraged.
Journal of Applied Corporate Finance • Volume 31 Number 4 Fall 2019
At the same time, sources targeted to a following with
technical knowledge or quantitative sophistication beyond
students’ current capabilities tend to be equally problem-
atic. Articles in many eminent academic finance publications
employ mathematical analysis that almost always exceeds
the comprehension of most introductory level learners. One
former student who relied on these kinds of sources wrote
a paper that referred to “cross-sectional variation in portfo-
lio choice,” “standard constant relative risk aversion,” and
“vector autoregression” without offering a word of explana-
tion; the terms were just direct quotes, from articles built
on elaborate quantitative models, that meant nothing to
the writer. A timeless reference source cannot elevate critical
thinking skills if the student can figure out only a few words
in the introduction and conclusions, fixating on isolated
facts at best, while entirely ignoring the principal thrust of
the author’s reasoning.
Of course, because the activity should expand the student’s
knowledge, it is natural that even some of the material
confronted in reference sources of the correct variety will seem
confusing, despite the student’s dutifully looking up unfamil-
iar terms and requesting explanations. Outlets like JACF and
JEP cover complex ideas in a manner suited to a cultivated
audience; a superior quality introductory student paper still
can exhibit passages the reader will know the writer did not
fully grasp. Evidence of a conscientious effort to understand
difficult constructs is that the student organizes and synthe-
sizes, and expresses thoughts in her own consistent wording
for the reader’s benefit, as opposed to simply shoving ideas
from the various sources into paragraph form—basically a
book report on the references. An alert evaluator can tell when
the writer is struggling with a great deal of the topic and highly
important points within the material. Telltale signs are disor-
ganization, unsupported claims, and considerable verbatim
quoting from technical accounts—all likely to have originated
with ill-advised reference choices.
Finally, a paper’s critical thinking components will be
strong only if supported by analytical reference material that
is sufficient in quality and quantity alike. A student cannot
expound intelligently on a topic unless she first has studied
a meaningful amount of written work; having two critical-
thinking reference sources that are just a few pages long
each cannot be expected to generate an outcome with much
substance. One characteristic of a good four-page paper is
that the producer must strive to get the story down to the
sanctioned length with tight writing and a carefully selected
micro topic; needing to add filler to reach four full pages
indicates insufficient exposure to suitable material. It is diffi-
cult to believe that a paper of the type described can have any
131
credibility if its writer has not read at least the equivalent of 25
to 30 printed pages, although not all of that material would
have to come from first-level, timeless reference sources.
Second-level sources from which the student learns
about the indicated topic can be “timely” in nature. Business
periodicals like Forbes, Fortune, and The Wall Street Journal,
along with the business sections of other newspapers, are fine
as sources of up-to-date factual information, but tend to be
less helpful as analytical tools. These types of publications
generally are written under strict time deadlines, and while
typically penned by knowledgeable journalists, their timeless
analytical counterparts have been produced, and then vetted
and endorsed, by people with acknowledged financial exper-
tise.8 The main drawback of the latter material is that it is
likely to contain examples that have become stale after a
potentially long review period. To remedy this problem,
students can consult timely sources like those noted above,
along with websites of major news, industry, or government
organizations, as helpful sources of timely information;9 since
little of what is posted on websites will have been subjected
to formal critical review, that content usually does not count
as analytical.
Therefore, while a student’s paper might be a conceptual
work based on first-level references alone, a viable combina-
tion might mix enduring sources to enhance critical thinking
with timely sources for accompanying examples. Or second-
level timely sources might offer suggestions on things to think
about, paired with first-level timeless sources’ insights on how
to think about them. Consider a student’s intellectual payoff
from combining the less technical overviews provided by the
blend of academics and practitioners in JACF roundtable
discussions with the underlying theory and analytical perspec-
tives presented in a couple of traditional JACF or JEP articles
on the same overall topic. A 20-year-old analytical piece may
well continue to provide a sound basis for evaluating capital
budgeting decisions, but showing such an account’s examples
of major companies’ capital outlays as “recent” would hurt
the paper’s credibility. And students are urged to verify that
second-level reference sources from which they draw current
examples truly are timely. Tax laws, mutual fund performance
rankings, and top executives’ identities are among details that
8 Accounts provided even by journalists who specialize in business can be at odds
with financial theory. As one example, the 1980s takeover wave was reported in the
press as a tragedy of losses imposed on unwitting victims, while financial economists
saw the takeovers as efficiently redirecting capital to higher-valued uses. See Michael C.
Jensen, “Corporate Control and the Politics of Finance,” Journal of Applied Corporate
Finance, Summer 1991, pp. 13-33.
9 Publications from Federal Reserve Banks’ education divisions can be especially
good second-level information sources, and personal interviews students conduct with
experienced practitioners also can count as timely references.
132 Journal of Applied Corporate Finance • Volume 31 Number 4 Fall 2019
can change quickly, and statements taken from a news article
even just a few months old might no longer be correct.
The Searchable Files
Although I implicitly understood the instrumental role of
the consulted references even in the years before that point
was stressed explicitly in my handout and spoken comments,
the evolution to a reference-based approach was slow. In the
earliest days I took the disastrous path of turning students
loose to select topics and find sources. The second iteration
was to have them think of topics to write on and then obtain
supporting sources from a limited list of suggested publica-
tions. Phase three involved providing a specified publication
list from which students were to secure reference material
for topics they could live with. For example, I would hand
over a stack of JACF hard copies and say, “Each issue has a
number of articles on the same general topic; try to find one
you like.” But now we are walking upright: I have compiled
files through which students can search our preferred reference
sources to discover ideas they can warm up to. Chosen topics
actually are of little ultimate concern to the grader; foremost
in importance is exposing students to excellent readings. The
searchable files for locating desirable references are centered on
the Journal of Applied Corporate Finance, an academic journal
that is, to a much greater extent than most academic outlets,
intelligible even to a student audience. Article authors are top
critical-thinking people in academics and industry—including
a number of Nobel laureates over the years—but they leave
the equations behind and lay their substantive stories out in
plain English, and in such a way that a student is reasonably
able to follow most of an author’s logic from start to finish,
thereby strengthening her own capacity to think and to artic-
ulate that thinking.10
10 The rare JACF article might have math above what most undergraduate business
students can handle; see Richard Ebil Ottoo, “Valuation of Corporate Innovation and the
Pricing of Risk in the Biopharmaceutical Industry: The Case of Gilead,” Spring/Summer
2018, pp. 92-108 (with a fairly computational real options approach to valuing innova-
tion in a risky environment). But more typical is coverage of a complicated topic in a
manner passably within the reach of typical undergraduates; see, for example, Graham
D. Barr, Theodor J. Stewart, and Brian S. Kantor, “‘Big Data’ Analysis: Putting the Data
Cart Before the Modelling Horse?” Spring/Summer 2018, pp. 40-44 (on the dangers of
relying on the increasing availability of historical data and computing power to mechani-
cally forecast stock prices that actually reflect dynamic human behavior); Bruce Tuck-
man, “Derivatives: Understanding Their Usefulness and Their Role in the Financial Cri-
sis,” Winter 2016, pp. 62-71 (which builds on the example of a brewer hedging input
costs to show that often-criticized derivatives actually reduced risks during the financial
crisis; the author notes that securitizations are not derivatives in arguing that mortgage
underwriting risks fueled the crisis and assuring that the liquid types of derivatives held
by major institutions were not a source of systemic risk); or Raul Guerrero, “The Case for
Real Options Made Simple,” Spring 2007, pp. 38-49 (the article explains the intuitive
foundation of real options, which make explicit the response to changing information that
decision makers understand instinctively and that is implicit in traditional discounted
cash flow analysis, showing that in real options analysis the “static” DCF model’s ex-
pected values and discount rates are computed independently).
Journal of Applied Corporate Finance
One of the searchable files is a Word document that incor-
porates all tables of contents since the JACF was first printed
in 1988.11 This file facilitates searching for distinct words or
phrases (such as “dividend” or “cost of capital”) that might
be embedded in an article title or multiple articles’ titles, or
for specific authors. Toward more effective searches I also
have attempted consistency in listing the names of contrib-
utors of multiple articles, such as always including middle
initials (showing the author as Benjamin C. Esty or Gregory
V. Milano for all articles even though the name appeared as
Ben Esty or Greg Milano in a particular piece’s original print-
ing). Also, both for consistency in searching and to reduce
confusion among students, I tried to type in the full wording
when article titles include acronyms like CEO, ESG, EVA®,
IPO, and M&A. The changes are billed here as “attempted”
because they were made as I noticed items over a long inter-
val; surely not everything has been caught (and just as surely
there are typos, for which I merit sole blame, in all of the
searchable files).
Links to files mentioned in this article can be found at
http://jacf-pub.com/.
Another file is an Excel spreadsheet that has searchable
information for every issue going back chronologically from
the present to 1988. It discloses, in various columns, the
“In This Issue” main theme, article title, lead author, other
authors, issue date, first page, and total pages, along with
two columns containing my take on each article’s main topic
and sometimes a secondary topic. For example, an article on
pension risk might be listed under Pensions first and Risk
Management second, or one on private equity in Poland
might fall under the Private Equity and International catego-
ries. The spreadsheet is quite effective for visual scanning, and
it makes for fast sorting and searching of articles on a given
subject, based on either the issue’s general theme or the topics
I identified. This file also facilitates searching for the same
lead author; the eight articles with Calomiris, Charles W. or
four with Wruck, Karen Hopper as the first or only author
are easily found with a sorting by the lead author column.
(Other contributors sometimes are located more expediently
with the Word file; Betty J. Simkins is promptly revealed as a
second or third author on five articles.) A sorting by the issue
date and first page columns returns the spreadsheet file to its
initial chronological order.
11 I have not organized materials from the Chase Financial Quarterly (1981-82) or
Midland Corporate Finance Journal (1983-87), publications that were forerunners to
the Journal of Applied Corporate Finance.
Journal of Applied Corporate Finance • Volume 31 Number 4 Fall 2019
One helpful feature of these compilations is the relative
ease of pinpointing articles on the same general topic but
written in different eras or by different authors, so an inter-
ested student can examine how particular ideas have been
analyzed as regulations and technology have changed, or
from varying viewpoints, and with competing arguments
acknowledged. Ideally the student identifies an issue, learns
background information, looks at what the experts have had
to say, and then thinks critically to develop her own opinions;
an exemplary paper should be more than simply a summary
of what the reference sources tell. If a modest bit of time spent
with the searchable files gives rise to an idea that appeals to the
student, she will have found a general topic that she is likely to
enjoy looking into, that has importance to the financial world,
and for which she has solid and relevant analytical reference
material readily available.12 Students have found these files
to be a very effective means of getting their papers off to a
productive start.
The searchable files place older and more recent articles
on an equal footing, because there can be great value in any
timeless reference material. A classic early treatment might give
a more careful or thorough introduction than later articles,
whose authors could take readers’ awareness of the subject’s
basics for granted,13 or it might hint at matters whose growing
importance would eventually become apparent.14 Facts and
figures presented in seasoned publications also can be useful,
when combined with newer information, in illustrating trends
12 Among countless possibilities: someone perusing the Main Topics column in a
printed copy of the Excel file and intrigued by Bankruptcy could do a Find of “bankruptcy”
in the Word file and see many articles, including a roundtable discussion, with that word
in their titles spanning 1989 to 2016. Over a lunch break, she could skim several of
them via her school library or with her professor’s help, and read executive summaries
of those that looked promising, and after that initial narrowing have plenty of appropriate
timeless and other supporting material around which to shape the macro version of a
bankruptcy paper. Then the real work would begin: reading, thinking, and refining so the
micro topic she wants to relate could disclose itself to her.
13 See as examples, in the Journal of Applied Corporate Finance, Clifford W. Smith
Jr., Charles W. Smithson, and D. Sykes Wilford, “Managing Financial Risk,” Winter
1989, pp. 283-304 (an early comprehensive introduction to derivatives based on care-
fully illustrated graphs that demonstrate how forwards, futures, options, and swaps are
interrelated); Charles Austin Stone and Anne Zissu, “The Risks of Mortgage-Backed Se-
curities and Their Derivatives,” Fall 1994, pp. 99-111 (written after the early 1990s
derivatives market crisis and assigned in my real estate finance course because of its
clear explanations of many special features of home mortgage notes as investment in-
struments, including duration/convexity issues, prepayment/reinvestment risk, and
tranches/securitization); and James A. Brickley, Clifford W. Smith Jr., and Jerold L. Zim-
merman, “An Introduction to Game Theory and Business Strategy,” Summer 2000, pp.
84-98 (an overview of game theory concepts like dominant strategies, Nash equilibria,
and first-mover advantage, based on the example of Boeing and Airbus that compete but
also cooperate at times, as sellers and as buyers, in an environment that requires antici-
pating what both competing firms and their governments will do).
14 A reprinted Nobel Prize acceptance speech was prescient in noting some issues
that would play a role in the financial crisis 15 years later, and also in mentioning the
debt problems of a famous New York real estate developer who would become a contro-
versial U.S. president; see Merton H. Miller, “Leverage,” Journal of Applied Corporate
Finance, Summer 1991, pp. 6-12.
133
over time. Older material additionally allows for historical
comparisons by sharing informed analysts’ insights on how
events have played out as the years passed. An example is
Enron, which students regularly cite as the biggest American
business problem during their lifetimes. A JACF article printed
after the collapse showed the executive reward structure as
a significant source of the failure, while a piece published
before the troubles became clear focused on the firm’s innova-
tive business model and use of human capital.15 As this case
suggests, critically reviewed analytical articles occasionally end
up not being timeless, as later events or research results call
their findings into question, but students are not expected to
be aware of such changes in this initial foray into financial
writing, with its grounding in a small number of appropriate-
level reference sources and emphasis on clear, evidence-based
thinking.
Some of the earliest JACF editions can be difficult
to track down, in electronic or even paper form. My own
university’s library has digital copies from 2002, and journal
subscribers receive electronic access through current publisher
Wiley’s website to full articles in all issues dating to Winter
1997. Well-stocked research libraries could be an avenue for
procuring paper copies going back to the first edition. But
fortunately the JACF’s creators also have assembled books that
reprinted some popular early articles, and for those articles
I added comments in the Word document like “Reprinted in
Corporate Risk Management, 2008, Donald H. Chew Jr., pp.
184-204.” The books might be more often available through
college libraries or individual faculty members’ bookshelves
than the early journal issues are. I have found 13 of these
books (and inserted applicable citations in the Word file); they
are listed in the bibliography.
Journal of Economic Perspectives
A searchable file for the Journal of Economic Perspectives is
a less ambitious Word document that merely lists finance-
oriented JEP articles by topic, such as Behavioral Finance and
Efficient Markets, Investment Principles, Pensions and Retire-
ment Planning, and Theory of the Firm. Searching for author
names and key phrases in titles also is expedited with this file,
of course. The included articles are those I deem to be focused
15 G. Bennett Stewart III, “The Real Reasons Enron Failed,” Spring 2006, pp. 116-
119; and Vince Kaminski and John D. Martin, “Transforming Enron: The Value of Active
Management,” Winter 2001, pp. 39-49. JEP’s Spring 2003 edition had a three-article
postmortem on the firm; see Paul M. Healy and Krishna G. Palepu, “The Fall of Enron,”
pp. 3-26; Baruch Lev, “Corporate Earnings: Facts and Fiction,” p. 27-50; and Joel S.
Demski, “Corporate Conflicts of Interest,” pp. 51-72. A JACF article may have shown
foresight in addressing financial reporting issues at General Electric nine years before the
company’s severe stock price decline and dividend cut; see Keith Sherin, “Planning and
Investor Communications at GE (With a Look at Why We Ended Earnings Guidance),”
Fall 2010, pp. 8-17.
134 Journal of Applied Corporate Finance • Volume 31 Number 4 Fall 2019
on finance rather than on economics more generally; it is a list
and not the list of finance offerings in JEP. There are numer-
ous banking entries, in keeping with the link between financial
institutions management and monetary policy. Also included
are many real estate articles, because of the foundation of real
estate analysis in urban economics, and the importance of
property rights to law and economics. The website for the
American Economic Association, which produces the JEP,
makes full versions of all previous articles available to the
public at no charge.
JEP articles occasionally contain equations, but those tend
not to be crucial to the student’s mastery of the author’s overall
argument.16 A JEP offering that touches on some finance
content but appears more tied to other applications within
the broad dismal science realm, like health care or labor, is
not on the list. Each article is shown under one heading that
seems to impart the dominant idea, but of course a written
piece can be about more than a single subject; one on incen-
tives to save money has elements of retirement planning and
behavioral finance both. Because the JEP file includes only my
identified list of finance articles, the document is short enough
that a motivated student should be able to read through it
completely in pursuit of favorable reference articles.17
JACF and JEP are kindred spirits, if that term can be
applied to publications. Both are analytical periodicals
whose presented concepts have been validated through the
oversight of skilled specialists, such as the JACF’s distinguished
academic advisory board. But because their articles are written
in a manner that makes high-level academic thinking acces-
sible to a wider audience, they are fairly well suited to the
needs of upper-division college students. Both have had very
dedicated long-term editors, and many names have been
common to the two publications’ author lists.18 Each delves
into regulation of the financial marketplace; both offered
insightful retrospectives on the new millennium’s financial
crisis. The sometimes longer JEP articles are written primar-
ily by prominent academic economists, while contributors to
JACF include both top academic people and major voices from
the financial industry around the globe. JACF sometimes has
articles that retell stories published earlier in more quantitative
16 If heavier math is essential to the author’s story, the searchable Word file notes
that the article is more quantitative; equations that appear only in footnotes are not
troubling if the student should be able to follow the author’s main tenets without them.
17 JEP recently published a long list of previous articles its readers have used in their
classes, across 33 different economics categories, a few of which are finance-related; see
Timothy Taylor, “Some Journal of Economic Perspectives Articles Recommended for
Classroom Use,” Fall 2019, pp. 243-248. My JEP listing is targeted to finance articles
only, broken into 23 more specific divisions.
18 In its Spring 1989 issue, JACF reprinted a shortened version of “The Modigliani-
Miller Propositions After Thirty Years,” a piece by Merton H. Miller whose original version
appeared in JEP’s Fall 1988 edition.
journals. It is especially strong on corporate governance and
the wider ESG area, which can supply worthy paper topics
especially for those from other academic disciplines enrolled
in the introductory finance course. Students of international
subjects have analyzed corporate governance as applied in
different countries, and fashion merchandising majors have
compared the actual corporate governance standards spelled
out on some large clothing retailers’ websites to best practices
as described in their critical-thinking reference materials. But
even finance or accounting majors more attuned to bottom-
line concerns could find it worthwhile to examine whether
firms perceived as socially responsible create greater wealth
gains for their common stockholders.
Conclusion
When Einstein said that education is what remains after
learned facts have been forgotten, he may well have had the
university experience’s critical thinking aspects in mind. Every
college course should have critical thinking as its primary
goal, and every collegiate finance course should stress critical
thinking in the context of financial concepts, markets, and
transactions. Improved thinking is the central objective in
my introductory financial management course that attracts
young scholars from throughout the institution, and certainly
it is the chief focus of the honors section paper writing assign-
ment. Not everyone will have the chance, while in school, to
complete the kind of experiential learning project that experts
in teaching future business leaders advocate,19 but a writing
task backed by the right instruction can help all students
analyze and communicate more capably as they prepare to
enter the professional environment. Finance students build
the framework for solid thinking by reading from publica-
tions like the Journal of Economic Perspectives and especially
the Journal of Applied Corporate Finance, with its real-world
relevance assured by the participation of industry leaders as
authors and reviewers.
The individual who simply sets out to address a topic
she would love to explore may at length resort to reference
sources she cannot meaningfully learn from, succeeding only
in producing an analytically weak paper. A writing exercise’s
proper emphasis should be succinctly conveying powerful
thoughts developed or augmented through true familiarity
with works written by people who are recognized authorities
19 The “Roundtable on the Achievements and Future of Business Education,” Jour-
nal of Applied Corporate Finance, Summer 2016, pp. 8-25, examines challenges busi-
ness schools face at a time when companies’ role in society is under greater scrutiny, and
when schools may be unprepared to develop expertise in integrated problem solving and
experiential learning opportunities while also selling the relevance of formal business
education when so many prominent business people do not have business degrees.
Journal of Applied Corporate Finance • Volume 31 Number 4 Fall 2019
in the pertinent field. The intent from the outset should be a
paper whose topic and content flow from reading enough of
the correct type of reference material. Employers and scholar-
ship committees that solicit writing samples have welcomed
crisply written analytical papers from my students in an age
when too much classroom writing originates with group
projects, and often features abundant downloaded text.
The reference-driven approach can yield benefits outside
the confines of short beginning-level class papers. Finding
reliable information sources as the first step can make sense for
a project of any size and for students at any level, from under-
graduate survey courses to graduate programs. The searchable
files that have proven so effective for my brief introductory
finance writing activities help users zero in on articles with
impressive thinkers’ perspectives over more than three decades,
so they should be useful tools for assignments at any scholastic
level requiring investigation of a financial topic, and to any
degree of depth. In fact, they may be best suited to a writing
task in a more advanced course that calls for a larger number
of reference sources. They could possibly be of value even to
people doing academic research.
It is always advisable not to over-promise. The paragraphs
above chart the aspirational tale of an ongoing quest for
continuous improvement, starting at the instructor’s end. My
students do not, in all instances, painstakingly read quality
reference sources and write exceptional papers; far too many
still choose not to take the initiative seriously. At the same
time, no one’s inaugural flight is expected to be perfect. Thus it
is comforting that those who take to heart the assignment and
the guidance provided, and who adhere to the reference-driven
approach of choosing topics by using the searchable files effec-
tively, do show noticeably better results than I observed from
their counterparts long ago. Even a diligent learner may not
comprehend every word in a particular JACF or JEP article,
but with a patient reading or two will understand a lot, and
will feel richly rewarded for the effort. There is little doubt that
the more earnest students have demonstrated increased criti-
cal thinking ability. And I am confident that they are reading
good stuff.
Joseph W. Trefzger is a Professor of Finance at Illinois State University
and a four-time winner of the school’s Outstanding MBA Professor award.
135
Bibliography
Books That Provide Reprints of some Journal of Applied Corpo-
rate Finance Articles
Brown, G.W. and D.H. Chew, Jr., Editors. 2005. Corpo-
rate Risk: Strategies and Management. London, U.K.: Risk
Books.
Chew, D.H., Jr., Editor. 2008. Corporate Risk Manage-
ment. New York: Columbia University Press.
Chew, D.H., Jr., Editor. 2001. The New Corporate
Finance: Where Theory Meets Practice, Third Edition. Boston,
MA: McGraw-Hill/Irwin.
Chew, D.H., Jr., Editor. 1999. The New Corporate
Finance: Where Theory Meets Practice, Second Edition. Boston,
MA: McGraw-Hill/Irwin.
Chew, D.H., Jr., Editor. 1998. Discussing the Revolution in
Corporate Finance. Malden, MA: Blackwell Publishing.
Chew, D.H., Jr., Editor. 1997. Studies in International
Corporate Finance and Governance Systems. New York, NY:
Oxford University Press, Inc.
136 Journal of Applied Corporate Finance • Volume 31 Number 4 Fall 2019
Chew, D.H., Jr., Editor. 1993. The New Corporate Finance:
Where Theory Meets Practice. New York, NY: McGraw-Hill,
Inc.
Chew, D.H., Jr. and S.L. Gillan, Editors. 2009. Global
Corporate Governance. New York: Columbia University Press.
Chew, D.H., Jr. and S.L. Gillan, Editors. 2009. U.S.
Corporate Governance. New York: Columbia University Press.
Chew, D.H., Jr. and S.L. Gillan, Editors. 2005. Corpo-
rate Governance at the Crossroads. Boston, MA: McGraw-Hill/
Irwin.
Stern, J.M. and D.H. Chew, Jr., Editors. 2003. The
Revolution in Corporate Finance, Fourth Edition. Malden, MA:
Blackwell Publishing.
Stern, J.M. and D.H. Chew, Jr., Editors. 1998. The
Revolution in Corporate Finance, Third Edition. Malden, MA:
Blackwell Publishing.
Stern, J.M. and D.H. Chew, Jr., Editors. 1992. The
Revolution in Corporate Finance, Second Edition. Cambridge,
MA: Blackwell Publishing.
ADVISORY BOARD EDITORIAL
Yakov Amihud Carl Ferenbach Donald Lessard Clifford Smith, Jr. Editor-in-Chief
New York University High Meadows Foundation Massachusetts Institute of University of Rochester Donald H. Chew, Jr.
Technology
Mary Barth Kenneth French Charles Smithson Associate Editor
Stanford University Dartmouth College John McConnell Rutter Associates John L. McCormack
Purdue University
Amar Bhidé Martin Fridson Laura Starks Design and Production
Tufts University Lehmann, Livian, Fridson Robert Merton University of Texas at Austin Mary McBride
Advisors LLC Massachusetts Institute of
Michael Bradley Technology Erik Stern Assistant Editor
Duke University Stuart L. Gillan Stern Value Management Michael E. Chew
University of Georgia Gregory V. Milano
Richard Brealey Fortuna Advisors LLC G. Bennett Stewart
London Business School Richard Greco Institutional Shareholder
Filangieri Capital Partners Stewart Myers Services
Michael Brennan Massachusetts Institute of
University of California, Trevor Harris Technology René Stulz
Los Angeles Columbia University The Ohio State University
Robert Parrino
Robert Bruner Glenn Hubbard University of Texas at Austin Sheridan Titman
University of Virginia Columbia University University of Texas at Austin
Richard Ruback
Charles Calomiris Michael Jensen Harvard Business School Alex Triantis
Columbia University Harvard University University of Maryland
G. William Schwert
Christopher Culp Steven Kaplan University of Rochester Laura D’Andrea Tyson
Johns Hopkins Institute for University of Chicago University of California,
Applied Economics Alan Shapiro Berkeley
David Larcker University of Southern
Howard Davies Stanford University California Ross Watts
Institut d’Études Politiques Massachusetts Institute
de Paris Martin Leibowitz Betty Simkins of Technology
Morgan Stanley Oklahoma State University
Robert Eccles Jerold Zimmerman
Harvard Business School University of Rochester

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