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

The story began when Brigham collided with Weston, already a luminary UCLA finance professor credited with coming up with the theory of “synergy” in mergers and acquisitions. Weston, known for taking 15-minute power naps on a board placed between two chairs in his office, had seen the word synergy on a restaurant drinks menu to describe how perfectly Irish whiskey blended with coffee to make Irish coffee.

Weston, who began teaching finance at UCLA in 1949, had in the mid-1960s a new take on the way finance should be taught. “Up until then,” recalls Brigham, “finance textbooks tended to be either accounting oriented or economics oriented. Weston merged those two things together. It was a book that professors thought was quite good, but students had a hard time with it.” Weston’s Managerial Finance was exceptionally dense, especially tortuous to students unfamiliar with finance. “His favorite expression when he was talking about a topic was ‘it therefore follows that…’

Brigham arrived at UCLA in 1962 after earning both his PhD and MBA degrees at Berkeley. As the newly minted PhD, he was assigned the introductory finance course taught from Weston’s brand new textbook. Brigham frequently engaged Weston on passages in the book he found confusing, if not incorrect. “Students would constantly complain about the book,” says Brigham. “Weston really wrote for academics—not students. Sometimes, even instructors were puzzled. When it came time for his book to be revised, he didn’t really want to update it so he asked me if I would do it. It seemed like a reasonable thing to do.”

Weston agreed to give his new co-author 30% of the book’s royalties, keeping 70% for himself. Typically, textbook authors are paid between 10% and 18% of the wholesale price for each book sold. Ever the finance prof, Brigham says he did a back-of-the-envelope “capital budgeting analysis” on the deal before deciding to work with Weston. The upshot: he estimated that the “net present value” of the agreement would be positive. “It turned out to be a lot higher than I estimated,” he laughs.

Suddenly, Brigham was in the textbook business. He had been using the book in class for a couple of years already and had copious notes to help translate Weston’s impenetrable prose into sentences that could be more easily digested by students. From the very start, Weston seemed less interested in revising something he had already done than moving on to other things. “He was supposed to do stuff, but he was always tied up,” recalls Brigham. “Really. I did everything. He looked at what I gave him and it was fine with him.”

Brigham brought a writer’s sensibility to the text. His mother was an Associated Press reporter who critiqued his papers in high school. And after he earned his PhD, Brigham worked for the Rand Corp., a think tank, writing white papers. “There motto was ‘paper is our only product.’ They had five English PhDs who checked everything. You couldn’t get anything published unless you had these English majors edit it. They really taught me how to write and I wasn’t a bad writer to start with. But I used inactive words and had what they called ‘dead wood’ in my writing.”

All told, it took Brigham six months to chop the dead wood from Weston’s original manuscript and finish up the revisions. The revised book was an immediate success: “When the second edition came out, its sales went way up from a couple of thousand a year to ten thousand a year,” remembers Brigham.

Yet even with the revision, the publisher still believed the work could benefit from more simplification and suggested doing two versions next: one more detailed volume for MBAs and a more simplified version for undergrads. Brigham went back to work, knocking out the undergrad version, Essentials of Managerial Finance, two years later in 1966 and the MBA volume, Managerial Finance, two years after that in 1968.

In those days, it was customary for a successful textbook to be revised every four years. Their publisher, however, wanted to get a jump on the competition and asked for a revision every three years. “That made the competing book to ours pretty darn old,” says Brigham. “And when they hurried up to get a revision out faster, they didn’t do as thorough a job—so we went ahead again.”

But the arrangement with Weston started to grate on him. “We were still co-authors through this, but I did all the work and that became a big issue,” concedes Brigham. “As the books became more successful, the royalties became an issue. We got into arguments about money. He continued not to want to work on the book, and I kind of didn’t want him to because he was so busy and he was always late. I dealt with deadlines better than he did. That went on. We argued over the arrangement as well as what to put in an introductory book.”