The new finance theory displaced managerial finance from business school curricula

Evidence

The intellectual world of Arthur Stone Dewing had been swept away. Standard aspects of “managerial finance” such as “cash flow forecasting, cash budgeting … [and] credit management” were set aside by Fama and Miller because work on them was “ad hoc” and “largely unrelated” to the emerging theory of finance (Fama and Miller 1972, p. vii). Replacing those topics was a broadly unified theoretical structure encompassing the topics of chapter 2 of this book: the Modigliani-Miller propositions, the work of Markowitz and Sharpe, and the efficient-market hypothesis. In the next two decades, The Theory of Finance was joined by many other textbooks building on the same core material. By the end of the 1990s, if one walked into almost any large university bookshop in Western Europe or in the United States, one could find shelves of textbooks whose contents had their roots in the finance scholarship described in chapter 2 and in option theory. — Donald MacKenzie, An Engine, Not a Camera, 313

Categorization

• XREF: Connects to the broader performativity literature on how academic models became institutionalized via textbooks and curricula. — connects to: Mathematical economics displaced descriptive institutional study of finance in the US — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 304; Business school institutional structure determines whether theoretical finance thrives — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1095; Finance was institutionally relegated to business schools and dismissed by academic economists as unscientific — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 319

Broader Connections

• Business school institutional structure determines whether theoretical finance thrives #expands (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1095