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A History of Corporate Finance

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A History of Corporate Finance

Cambridge UP,

15 min read
10 take-aways
Audio & text

What's inside?

For a survey course on the development of corporate finance, share pricing, government and business relationships, and a variety of business structures — from the successful center firm to the failing LBO — this is History 101, basic but very thorough.

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Editorial Rating



  • Comprehensive
  • Analytical


This thorough, scholarly study balances broad concepts with specific details of the history of finance from the 15th through 20th centuries. Though authors Jonathan Barron Baskin and Paul J. Miranti Jr. assume that the reader has some knowledge of finance and relevant terms, they avoid mathematical models and jargon in favor of plain language. Their book is accessible and valuable to lay readers as well as trained economists, historians, students of finance and anyone coping with an emerging market. The issues they examine remain surprisingly relevant, because - as they soon make clear - the problems that historical markets once confronted are the same issues of risk and information that markets face today, particularly emerging markets. As a historical study, this book presents no particular prescriptions for success or future action. However getAbstract recommends its explanation of why some structures succeeded and others failed, because those forces have clear implications today.


Centuries of Interaction

Two central questions of modern financial theory also shaped finance’s history: the financing question - focusing on the elements that determine a firm’s capital structure - and the dividend question - focusing on factors that control distribution of residual income to shareholders. These questions emerged over five centuries as risk, knowledge, organization and institutions interacted. Through time, four circumstances drove financial innovation:

  • Firms could realize economies of scale and scope by attracting large amounts of capital.
  • Financial innovations could help firms gain from external events, such as weather or war.
  • Firms gained when financial innovations reduced the perception of risk.
  • Financial innovations helped firms overcome costly imperfections in their markets.

The Pre-Industrial World

Even in ancient times, finance was influenced by the perennial problems of information and risk. In the 10th century, greater literacy and new forms of measurement - such as algebra, arithmetic and double-entry bookkeeping - spurred an economic revival in Europe. An increase in farm productivity provided...

About the Authors

Barron Baskin was associate professor of Finance at Baruch College from 1985 until his death in 1989. Paul J. Miranti is the associate dean in the faculty of management at Rutgers University.

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