From the Editor

This issue contains Issue 1 of Volume 26 of Financial Services Review (FSR). I would
like to thank the board and members of the Academy of Financial Services for their
continued support. I continue to work in broadening the scope of articles, while still focusing
on individual financial management and personal financial planning. I encourage authors to
reach out when discussing implications of their findings in a more comprehensive way. As
such, all articles in the Journal more appropriately relate to financial planning issues.

The lead article “Individual Estimates of Life Expectancy and Consumption Patterns,” is coau-
thored Derek R. Lawson and Stuart J. Heckman, both at Kansas State University. Using the 2013
Survey of Consumer Finances, the authors investigate the relationship between subjective life expec-
tancy and three indicators of consumption: financial assets, credit card debt, and saving behavior. Their
results indicate that remaining work life expectancy and retirement life expectancy are associated with
financial assets and that retirement life expectancy is associated with savings behavior.

The second article “Employees’ Financial Behaviors Following the 2007–2009 Financial
Crisis,” is coauthored by Crystal Hudson at Clark Atlanta University, Wookjae Heo at South
Dakota State University, Heejung Park at University of Wyoming, and Lance Palmer at Uni-
versity of Georgia. This paper is based on the foundation that low- and middle-income employees
make up the bulk of potential participants in employer-sponsored retirement plans and employers
find it difficult to alter the employees savings behavior. Noting that financial crises may have
unintended positive effects on low-income employees’ behavior, the authors examine the effect
of the 2007–2009 financial crisis on employees’ financial behaviors using data from the Survey
of Consumer Finances. Their results show that following the financial crisis, all employees’ and
low-income employees’ savings behavior significantly improved and employees’ cash flow
management behavior improved following the crisis, while it had no effect on low-income
employees’ cash flow management behavior.

The third article, “Value Line Quarterly EPS Forecast Error: Analyst Credibility or
Management Appeasement?” is authored by Philip Baird at Duquesne University. The author
studies Value Line quarterly earnings forecast errors from 1999 through 2016 and shows that
the direction of forecast bias and forecast efficiency with respect to earnings news depend on
investment rating. He concludes that patterns of bias and inefficiency indicate that Value
Line analysts are primarily motivated to maintain credibility with investors than to appease
company managers. He also shows that for Buy-rated stocks, forecast bias is pessimistic, and
forecasts are inefficient with respect to good earnings news. When news is bad for Buy-rated
Stocks, forecasts are unbiased and efficient. For Sell-rated stocks, forecast bias is optimistic,

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and forecasts are inefficient with respect to bad earnings news. When news is good for
Sell-rated Stocks, forecasts are unbiased and efficient.

The fourth article, “Personality and Borrowing Behavior: An Examination of the Role of Need for
Material Resources and Need for Arousal Traits on Household’s Borrowing Decisions” is coauthored
by Atefeh Yazdanparast and Yasser Alhenawi, both at University of Evansville. The authors examine
the role of psychological characteristics of household decision makers in their borrowing decisions
using the Survey of Consumer Finances and direct measures of each surveyed household’s personality
scores, relevant attitudes, and financial profiles. They examine the relationship between attitude
towards borrowing and intentions to apply for specific borrowing options and inspect the role of
personality traits in such decisions. Their findings indicate that the attitude toward borrowing and the
intuition to borrow are not always consistent and the discrepancies between the two vary across
personalities, highlighting the role of personality traits in borrowing decisions. The authors report
strong evidence that personal attitudinal biases towards money, risk, financial planning, and borrowing
as well as certain demographic characteristics influence household’s borrowing behavior.

The final article, “The Impact of Age Differences and Race on the Social Security Early
Retirement Decision for Married Couples: An Extension with Gender Role Reversals,” is
coauthored by Diane Scott Docking at Northern Illinois University, Rich Fortin at New Mexico
State University, and S. E. Michelson at Stetson University. The authors examine the impact of
age differences on the social security early and delayed retirement decision for married couples.
They develop an Excel model to compute the breakeven internal rate of return for each of the race
combinations. They find for couples the greater the age difference, the greater the incentive to
retire early, as the hurdle rate is lower to overcome. Because women almost always have higher
BE IRRs than men, they find that in marriages where the wife is the breadwinner and the older
partner, it is more difficult for the couple to retire early, as compared to marriages where the
husband is the breadwinner and the older partner. Hispanics have higher hurdle rates; while
Whites have lower hurdle rates. Because of the difference in break-evens, Hispanics have a more
difficult time retiring early, while Whites have a less difficulty retiring early.

Thanks to those who make the journal possible, especially the referees and contributing
authors. Over the past year, the following reviewers provided excellent reviews of the articles
you enjoyed within the pages of Financial Services Review. I would like to send a special
thank you to the many reviewers that have significantly contributed to the quality of our
journal by providing timely and thorough reviews of the submissions to our journal.

Please consider submission to the Financial Services Review and rely on the style
information provided to ease readability and streamline the review process. The Journal
welcomes articles over the range of areas that comprise personal financial planning. While
FSR articles are certainly diverse in terms of topic, data, and method, they are focused in
terms of motivation. FSR exists to produce research that addresses issues that matter to
individuals. I remain committed to the goal of making Financial Services Review the best
academic journal in individual financial management and personal financial planning.

Best regards,
Stuart Michelson

Editor Financial Services Review

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