It is with great pleasure that I am announcing the Best of 2006 Book Awards. Many years ago, I took up the task of writing financial book reviews, primarily as a means of forcing myself to keep abreast of developments in my field. It is a monumental task, since I try to review all new releases suitable for a professional audience. It does, however, put me in a unique position to survey all the books published each year and announce, with some credibility, what I consider to be the ten best. This year's winners are listed at riskbook.com. In the past, I have just listed the winners without commentary. This year, I have decided to write a commentary and place it here, in the new blog. Below, I discuss the winners, this year's trends in publishing, what's "hot" and what's "not," and a few books that didn't make the top ten but are noteworthy for one reason or another. This year, what is "hot" is books on credit risk. Fueled by an active credit derivatives and CDO market, not to mention Basel II, researchers and practitioners are doing innovative work in credit risk measurement—and it is making its way into books. This isn't a new trend. Recent years have witnessed a number of outstanding books, including Schonbucher (2003), Bomfim (2005) and Altman, Resti and Sironi (2005). For 2006, there are a number of exciting releases that break new ground while adopting more of a practitioner's perspective than the earlier books. Felsenheimer, Gisdakis and Zaiser (2006) and Bluhm and Overbeck (2006) both won awards this year. Choudhry (2006) is also worth a look. What is "not hot" is financial engineering books. This is easily the most over-published area of finance. After many tries, we have yet to find a Hull replacement. There is a pot of gold waiting for whomever publishes it, but I think we can take a break from the search for a year or two. I also think we have enough books catering to the Ph.D.-level reader. Those people tend to read original sources anyway. Mercifully, the avalanche of financial engineering books has slowed. Among this year's new releases, two are notably unique. Dineen (2005) won an award for providing a treatment of financial engineering math that is simultaneously accessible and rigorous. The book was actually published in November 2005, but that was too late for consideration for a Best of 2005 Award. Singleton (2006) didn't win an award, but it is a interesting specialty book looking at the empirical validation of asset pricing models. The only category of books even less "hot" than financial engineering this year is hedge fund books. Hardly a day goes by, it seems, without another one landing in my mail box. If you know anything about hedge funds—anything other than the propaganda in these trashy books—you know that prime brokers and their ilk are getting filthy rich off hedge funds. There is a marketing machine behind the industry, and the numerous hedge fund books are part of it. Many of the books cross the line and are blatantly dishonest in how they distort facts or omit information in order to push the funds. I hear a huge sucking sound of money flowing from wealthy individuals and pension plans to prime brokers, hedge fund managers and the rest of that questionable industry. I blame John Wiley & Sons for publishing the vast majority of these sleazy books. Will the employees at Wiley please do us all a favor, and JUST STOP? I personally have been too generous in reviewing these books. Expect a change in tone for 2007. Thankfully, there is one exception to the all-hedge-fund-books-are-trashy rule this year. It was published by Risk Books. It didn't receive an award, but Berman (2006) is definitely worth a read. Publishing is not only about trends. Every year, there are some unexpected gems that appear out of nowhere. In this year's crop is Boberski (2006), a wonderful book on interest-rate futures. It is a book about trading for traders, in the tradition of Baird (1993) and Taleb (1996). Rubinstein (2006) is an informative, and quite comprehensive survey of important milestones in financial literature. Benaben (2006) is an outstanding edited collection on inflation-indexed instruments. Davis and Etheridge (2006) have produced an instant classic. Written around a new translation of Bachelier's famous (1900) thesis, it delves into the history of stochastic calculus and continuous time finance. It is a fun and informative book for anyone interested in financial history. All of these books won awards this year. One that didn't is also worth mentioning. Although tainted with plagiarism by a contributing author, Matz and Neu (2006) is a badly needed book on liquidity risk management within banks. If you are a bank regulator or bank risk manager, you should definitely read it. If you are interested in corporate governance or social issues, there is plenty to be thankful for. Not only did the mid-term elections make George Bush officially a lame duck, but my just-published paper Investor Suffrage Movement is transforming the debate on corporate governance. There are also some notable new books to place under the Christmas tree. Ali and Gregoriou (2006) is a wonderful collection of articles on corporate governance. James and Fusaro (2006) offer a sophisticated introduction to emerging emissions markets. Waygood (2006) takes an informed look at capital markets campaigning from the perspective of both activist non-government organizations and the corporations they target. All three books won awards this year. That's it until next year. Happy reading! Glyn A. Holton
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the ten winners of
