How MBAs Learn Finance: The Story Behind A Best-Selling B-School Textbook

Eugene Brigham

Weston favored putting the latest financial theories and concepts into the book, no matter how opaque they might be. Brigham preferred to err on the side of simplicity to make the book even more digestible by the students reading it. Ultimately, by the mid-1970s, they agreed to a solution. Weston would take the two original books, revise them and get the majority of the royalties. Brigham would come up with two different textbooks on his own, borrowing from the material in the last editions of the books he had largely revised.

Without the need of Weston’s approval, he more aggressively changed the text, moving key sections around, shifting such core concepts as the time value of money and compounded interest from chapter ten to chapter two—then bringing back those ideas again and again throughout the text. “Gene is creative and forward thinking,” says Mike Reynolds, his editor since 1995. “And he meets deadlines.”

Weston’s books grew heavier and heavier. “He would tend to put all the new finance developments in his book, and I would hold it down to what I thought students could handle,” says Brigham. “What ended up happening is that new PhD students liked his books better. People who had been teaching for a while liked mine. Students taught with his book gave their teachers evaluations that weren’t as good.”

The publisher warned Brigham that it was inevitable that Weston’s books would remain the top sellers because of the inertia of professors who were more familiar with Weston’s name which always came before Brigham’s. But it didn’t take long for Brigham’s books—Fundamentals of Managerial Finance and Financial Management— to pull ahead. “When Weston started doing the books again, he went back to his old writing style, and it was hard for students to follow,” says Brigham.

By 1980, the Weston books were essentially dead. He lost all interest in revisions, and the publisher asked Brigham if he would take over the undergrad version of the book. Weston drafted a former student to revise the MBA version, which stayed alive for a couple of editions more before quietly disappearing from the market. In 1983, his then publisher hosted a party in San Francisco to celebrate the sale of more than one million copies of Essentials, his first collaboration with Weston. By then, however, Brigham had already found himself with several top selling introductory textbooks in finance and the No. 1 seller to MBAs—a situation that would last for more than a quarter of a century.

What’s kept him in the lead? Once Brigham was on his own, he dreamt up a clever marketing gimmick: He agreed to pay $5 to any reader who found an error in the book. One grad student at the University of Southern California discovered more than two dozen mistakes, pointing them out on a form he called an “Error-O-Gram.” “There were hundreds of mistakes that no one had caught,” says Brigham. “They weren’t necessarily bad, but they weren’t good. So the book got cleaned up. I paid out about $1,700, at five bucks a shot.” And the publicity didn’t hurt, either.

His publisher, Cengage Learning, also paired him with exceptional editors. They have kept the book ahead of the competition by producing increasing number of “ancillaries”—PowerPoint slides, Excel spreadsheets, a website with additional questions and answers, and examples. “In many other instances, that is farmed out to a third party,” says Reynolds, executive editor. “This authorship group actually writes all of them. So he link between the ancillaries and what is actually in the book is tighter and the accuracy higher.”

The competition, meantime, has become less severe. In the beginning, when Brigham did his first revision of Weston’s book, there were as many as 30 different textbooks on finance. Today, says editor Reynolds, just three books account for nearly 90% of the entire market: Financial Management, Corporate Finance, and Principles of Corporate Finance. “New ones come out but it’s really expensive for publishers to produce them, and people spend a lot of time writing books that never sell,” says Brigham. “The barriers to entry are pretty high.”