The Financial Analysts Journal, what the CFA Institute calls its flagship publication and one of its principal means of outreach to advance development of the investment management profession, recently has appeared at risk of losing its way.
That seemed likely to blemish the institute's reputation and image as the thought leader in the investment management and financial research field worldwide, and it stepped in to fix the problem. It is to be congratulated.
There appears to have been favoritism in publication of peer-review articles based on the acceptance rate, while at the same time the number of articles published has been declining, even though submissions from practitioners and academics seeking exposure of their research have been been growing.
With a global distribution that reaches 125,000 CFA Institute members and others, the FAJ is highly prized among practitioners and academics for publication of peer-reviewed articles.
It is one of the highest ranking investment management journals, practitioner or academic, according to independent surveys cited by the CFA Institute.
The FAJ serves as an important bridge between research by academics and application by practitioners, contributing to bringing the latest ideas to the investment management market as well as its leadership in financial thinking in the field. Stephen M. Horan, CFA Institute managing director and co-lead, education, who oversees the FAJ, said the FAJ is a “sought-after publication,” by practitioners and academics.
The strength of the FAJ depends on its reputation for the quality and integrity of its articles. But the publication has been slipping in thought leadership as measured by the number of peer-reviewed articles published, according to observations by CFA Institute members.
To help put the FAJ back on course, the CFA Institute recently changed its policy on who is eligible to publish peer-reviewed articles in the journal.
Mr. Horan said the FAJ risks losing trust with this readership in the investment management community. He said the change in policy will help to avoid appearances of conflicts of interest and abuse in publication of articles, and help affirm the integrity of the publication. It is a necessary change.
That change is a reversal of a policy adopted in 2010 that allowed the editor to contribute one peer-reviewed article for publication each year. Rodney N. Sullivan — the FAJ editor who negotiated the change with the CFA Institute — took full advantage of that latitude.
Potential contributors, who seek exposure of their research in the FAJ, as well as its readers looking for new ideas, must be scratching their heads wondering what's happening to the revered CFA Institute publication. They must be wondering whether the FAJ is used to further the aims of the CFA Institute members and a wide range of viewpoints of the global investment management community or personal ambition.
Since Mr. Sullivan was allowed to contribute a peer-reviewed article per year, the FAJ acceptance rate and total number of published articles has declined almost every year.
The FAJ receives hundreds of submissions a year of articles seeking publication. Since 2006, the number of submissions had gone up almost steadily, rising to 394 in 2011, 422 in 2012 but slipped to 401 in 2013. The FAJ hasn't published 2014 data yet. In short, the large number of submissions is a sign of the FAJ prestige.
But in the latest FAJ, its November-December issue, the number of peer-reviewed articles published has fallen to a low — only three. In all of 2014, the FAJ published only 24 peer-reviewed articles, another low.
The acceptance rate and the number of articles published have fallen almost steadily since Mr. Sullivan was allowed to contribute one article per year. By contrast, the FAJ published 28 peer-review articles last year, 35 in 2012, 33 in 2011, and 37 in 2010.
The acceptance rate for publication of peer-reviewed articles — essentially the annual number accepted divided by the annual submissions — fell to 6.1% in 2013, the latest data available.
Like other peer-reviewed submissions, those submissions written by Mr. Sullivan, who was a co-author on all of them, had to go through a double-blind peer-review process. He also published other, non-peer-reviewed articles in the FAJ in conformance with his duties as editor.
But while the acceptance rate fell steadily for other submissions to 6.1%, Mr. Sullivan appeared to have a 100% acceptance rate. Although he was unable to say how many he submitted, he acknowledged his rate was very high.
Other potential contributors must wonder about the integrity of the peer-review process when Mr. Sullivan has been one of the top authors of the publication. Mr. Sullivan said he put in place a method to keep the blind process for his submissions, and Mr. Horan said Mr. Sullivan's contributions went through a different blind peer-review distribution process.
Mr. Horan said Mr. Sullivan didn't have much of a publishing record before the FAJ. “But Rodney really developed a capacity for thought leadership,” Mr. Horan said. As it turned out, Mr. Sullivan said, “I had a very good acceptance rate,” compared with submissions by other authors.
But there is at least the appearance of a conflict of interest when an editor has so many peer-reviewed articles published compared to practitioners and academics. Reviewers might see approval of Mr. Sullivan's articles for publication as a gateway to publication.
In fact, the FAJ lists five peer-reviewed articles in forthcoming issues. Of the five, two have co-authors who include Mr. Sullivan and Luis Garcia-Feijoo, who was named interim editor upon Mr. Sullivan's departure.
Exposure in FAJ has been good for Mr. Sullivan, who left as editor May 23 to take a position with AQR Capital Management LLC as a vice president to lead the firm's outreach program to engage clients and prospects with the firm's research ideas.
Mr. Sullivan attributes the decline in the FAJ acceptance rate to the quality of submissions, which “weren't as great” as in the past, he said. In addition, Mr. Sullivan said he sought to raise the FAJ's quality to conform with the growth of the profession's quality standards. Yet, as the quality hurdle rate rose, his submissions rose accordingly, beating out other authors for publication.
Mr. Horan said the policy change on editor contributions is designed to “preserve the status and integrity the FAJ enjoys and put the publication above reproach.” In discussing the change, Mr. Horan said the staff at the CFA Institute, including the FAJ, has to “eat our own cooking,” meaning abiding by the CFA Institute's ethical standards and codes.
The CFA Institute has no plans to announce the policy change, only posting it among the FAJ existing policies.
This year marks FAJ's 70th anniversary. Barbara Petitt, who was named Nov. 24 to replace Mr. Sullivan as FAJ editor, should be more transparent about the change in policy and announce it, using the anniversary as an occasion to affirm to practitioners and academics that the FAJ is concerned about conflicts and objective standards and integrity. CFA Institute members should demand no less.