The story behind a B-school textbook fortune

(poetsandquants.com) — When Eugene Brigham was asked by his boss to help co-author a revision of a finance textbook, he jumped at the chance. It was 1966 and Brigham was all of 35 and an assistant professor of finance at UCLA’s business school. Soon enough, his byline would follow legendary financial whiz J. Fred Weston on the second edition of Essentials of Managerial Finance, which then sold for all of $7.95. Some 45 years later, Brigham is still the best-selling author of the most durable finance textbook for MBAs ever written: Financial Management: Theory & Practice, the successor to Weston and Brigham’s revision. It is often required reading in the core MBA curriculum at many business schools — and it has made Brigham, now a sprightly, golf-playing retiree of 80 years, one of the wealthiest B-school teachers ever. His 10 textbooks on finance have been translated into a dozen languages and used at more than 1,000 universities. They’ve sold more than 5 million copies. This past year, Brigham’s last two editions of Financial Management are the first and third best selling textbooks for MBAs, according to Bowker, which tracks book sales. In some years, Financial Management can garner as high as a 40% share of the estimated 100,000 students who annually use an introductory textbook on finance. For Brigham, the books have been a constant part of his life for more than 40 years. Sometimes, he concedes, the endless revisions have been an albatross. But his income from textbook writing has far exceeded all the paychecks he ever received as a teacher at Berkeley, UCLA, the University of Wisconsin, and the University of Florida. Last year alone, the new and used editions of the textbook racked up revenues of some $5 million. Financial Management has certainly stood the test of time, surviving Wall Street collapses, corporate corruption, financial calamities, and an assortment of newfangled concepts and theories, some of which helped to cause a near total implosion of the world’s financial system. The 13^th, and latest, edition of the book weighs in at 4.6 pounds and 1,184 pages. It lists at a price that would easily provoke condemnations of price gouging: $242.95, though a Kindle version sells for $145.56. MBA students who have thumbed through its pages have variously described Financial Management as everything from “not just the best financial textbook, but the best textbook I have ever read” to “the most boring book ever.” Origins of a legendary B-school textbook The story of how Brigham managed to write the text that would shape the way generations of MBA students have learned such fundamental concepts as the “time value of money” to the “capital asset pricing model” is a tale of circumstance, luck, skill, and dogged persistence. The chronicle began when Brigham collided with J. Fred Weston, already a luminary UCLA finance professor credited with developing the theory of “synergy” in mergers and acquisitions. 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. Brigham arrived at UCLA in 1962 after earning both his PhD and MBA degrees at Berkeley. As a newly minted PhD, he was assigned to 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. 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.” 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. “Their 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.” All told, it took Brigham six months to chop the dead wood from Weston’s original manuscript and finish 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 10,000 a year,” says Brigham. Yet even with the revision, the publisher still believed the work could benefit from more simplification and suggested doing two versions next: a detailed volume for MBAs and a 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.” A falling out with a silver lining As time wore on, however, 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,” says 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.” 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 to students. Ultimately, by the mid-1970s, they agreed on 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, Brigham changed the text dramatically, moving key sections around and returning to key ideas throughout the text. 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 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 published several of the top-selling introductory textbooks in finance — a situation that would last for more than 25 years. Using co-authors has greatly helped Brigham keep the textbooks relevant despite all the changes in the financial world. “I planned to retire around 1990 and was damn sure I wouldn’t work past 1995, but I found I missed it. It turned out that I wasn’t very good at golf, but I was good at textbooks.” More from Poets&Quants: