Report on the American Finance Association seminar on ‘How will the world wide web change publishing and research in finance‘ at the annual conference of the ASSA (allied Social Science Associations), New Orleans, January 1997

by Alan Freeman, University of Greenwich

The meeting was a snapshot of the current state of debate and activity in the rapidly-growing sphere of electronic publishing which was fascinating for the absence of gee-whiz philosophising, useful for the presence of sound practical experience and noteworthy as a sober evaluation of the possibilities and problems in this new field. Electronic distribution appears on the verge of offering a serious alternative to traditional publishing but has encountered a range of difficulties both technical and of basic principle.  The meeting addressed both, distinguishing carefully and accurately between them.

Speakers were Wayne Marr of the Social Science Electronic Publishing, a commercial organisation providing an electronic distribution service in the Social Sciences; William Goetzmann of the Yale University School of Management; Paul Malatesta of the Journal of Financial and Quantitative Economics; Rene Stulz of the Journal of Finance; and G William Schwert of the Journal of Financial Economics. Tim Opler of Ohio State University presided.

Two basic models of electronic publishing were present on the platform. Social Science Electronic Publishing, through the Social Science Network (SSRN), operates a distribution service for academics grouped under subject specialisms free of the space and time limitations of the printed medium. Subject-specific networks such as the Financial Economics Network (FEN), Economics Research Network (ERN) and Accounting Research Network (ERN) branch off gateway-stype from its home page. Each groups a series of journals which mail out abstracts and provide downloadable versions of the abstracted papers and is managed by an academic editorial team. Subscriptions are low – typically $10-$50, in contrast to some other electronic distribution enterprises. The emphasis on rapid and general distribution provides an outlet which removes the frustrating delays associated with traditional distribution and bypasses the printed page altogether, but reduces the editorial selection associated with a traditional journal.

The financial journals, though their principal medium is the printed page, provide a growing range of electronic services including electronic distribution as an adjunct to their printing operations. Accepted articles are increasingly available to journal subscribers in electronic form before appearing in print. New research results are thus still subject to peer review but available as soon as this is complete, unhindered by traditional publication backlogs.

Journals also offer electronic submission and refereeing which improves turnaround time and enhances interaction between authors, referees and editors. Rene Schultz’s ‘tips from the editor’ page is well worth a visit, not only for the answer to ‘The referee is an idiot: what shall I do?, closely followed by ‘The referee is not an idiot. what shall I do?’ The Journal of Finance Economics not only has a disputes procedure but publishes it electronically, three steps ahead of  more British Journals than I care to mention. It also publishes a provides a Public-Utility-style how-quick-we-did-it page revealing that, for example, 112 of 361 submitted papers were refereed in more than three weeks and less than six. A median turnaround time as 46 days raises the intriguing possibility of accumulating 24 rejections in the life of a single HEFC assessment exercise. But hey, this is the world of Finance.

Professor Marr’s discussion of the technical state of the art illustrated clearly that electronic distribution is by no means a millenial wonderworld. He opened with the basic obstacle to more fanciful models of dissemination: the gap between the hypertext capabilities the web purports to provide and its actual performance. He was sceptical that electronic publication will change the fundamental form in which an article is published, as a serial self-contained document with standard literary references. It is true that hyperlinked documents offer possibilities beyond the black-and-white printed page, which multimedia authors are using with rising expertise: vivid images, motion, interaction, and the chance to leap directly from reference to referenced object. They offer the distant prospect of changing altogether the concept of publication: document components might, for example, be stored and even authored separately so that formal publication consists only of creating the appropriate links and bridges. Having experimented with this model, Marr found it did not work for what seems to me quite a profound reason: the hyperlinks move.

This does not rule out whizz-bang components like simulations, spreadsheets or databases and the speakers stressed the advantages of such new forms: for example, publishing the data underlying a complex calculation and even the actual formula for computing it, making it far easier for researchers to replicate and query results. The central difficulty, however, is whether such works are published as a self-contained integral document or a set of linked but distinct components.

Nothing, as any seasoned web-cruiser knows, is more frustrating than alternating between gateways in which half the links are down, and search engines which return ten thousand references to an innocent query. Marr’s account suggests to me that this problem is not merely technical. A hyperlinked community would depend on rules of conduct not often observed among intellectuals, such as keeping documents in the same place and refraining from changing them retrospectively. A large part of the labour of maintaining a web distribution site, he explained, consists in continuously checking and rechecking the hyperlinks.

The coming (when?) generation of client-server object-oriented file systems may overcome this but the technical preconditions are formidable. It would, it seems to me, require a generally-agreed, non-erasable and worldwide system for uniquely identifying and authenticating every document on the net, a search technology capable of finding them, and a user community which upgraded to this technology and accepted its civil rights implications. It is not even clear we want such a thing, never mind whether it is possible.

These difficulties are currently overcome only in the context of corporate intranets where universal standards for document naming and placement can be established, or proprietary distributed database solutions such as Lotus Notes. Marr’s chosen procedure, which seems a sound compromise for the current state of the art, is to treat electronic publishing for what he terms ‘net dissemination’ of self-contained traditional documents. His organisation distributes them in Acrobat PDF format, which allows accurate and standardised rendering of diagrams, images and pagination and can be accessed on almost any system using Adobe’s free reader. This might not be the only solution but it seems to me the question of document integrity is quite a fundamental one for the medium-term future of eletronic distribution.

Overlaying and surpassing technical questions is what Marr termed the ‘model of electronic scholarship’. On the one hand, he stated, a growing body was questioning peer review as such, a suggestion taken up by other speakers who acknowledged that citation frequency or even web hits might provide equivalent or alternative criteria of merit, a ‘market model’ of success which was not without its problems. Marr asked the blunt question: is the new form of publishing best defined as Instantaneous Scholarship, or Junk? SSRN’s premium was on accessibility and speed of distribution. But this did open the way to what might become, in effect, vanity or self-publishing with no constraint on content.

However as Paul Malatesta pointed out, there is no necessary technical feature of electronic distribution that rules out peer review and other quality controls. He usefully divided the activity of journal publication into four categories: manuscript development services (peer review and editorial functions); authentification (editorial acceptance or rejection); production of archival medium, and dissemination. The printed medium, he pointed out, is the traditional basis of all four services. But if the second two are offered electronically, there is no intrinsic reason to abandon the first two.

The final set of issues arise in a productive if brief exchange on the conflict between commercial and scholarly requirements. There was no consensus on where copyright should, or even actually did reside and each organisation seemed to follow a distinct policy. It is not even clear what commercial interest will dominate. North-Holland, who publish numerous academic titles, explained from the audience that its commercial interests determined that it should maintain copyright. The undoubted success of a new breed of electronic entrepreneur indicates that sheer ease of reproduction will become a major threat to this traditional view. If commercial publishers become as active as geneticists, fashion gurus, software houses and the World Trade Organisation in defence of intellectual ownership, we can expect a more than a scholarly interest in document authentification. However, the distinction between authorship and ownership is clearer in publishing than in most spheres; so the underlying issues of social and intellectual policy may be aired more openly, as was the case in this fascinating session.

Co-ordinates:

Social Science Research Network www.ssrn.com

Journal of Finance www.cob.ohio-state.edu/~fin/journal/jof.htm

Journal of Financial Economics www.ssb.rochester.edu/fac/jfe/jfe.htm

Journal of Financial and Quantitative Economics weber.u.washington.edu/~jfqa/