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Frank Werner
Frank M. Werner (contact person), James A.F. Stoner

A Next Generation Finance Textbook Consistent with the Evolving Finance Paradigm

There is a paradigm for the production, distribution, and consumption of the benefits of private enterprise that is widely accepted in business practice and in academic teaching and research throughout the world. One (perhaps “the”) core belief of this paradigm is that business enterprises make the maximum contribution to society when they act to maximize their financial value. Since the largest of these enterprises are typically organized as corporations whose financial value may be measured by the value of the corporation to its shareholders, the paradigm is commonly referred to as “Shareholder Wealth Maximization (SWM).” Within the academy, finance textbooks accept SWM as the goal of the for-profit company without any critical discussion and proceed to present analytical and decision-making techniques that take SWM as a given. (A notable exception is the two textbooks written by two presenters at the 2017 IAJBS World Forum that acknowledge that SWM is not the correct goal for business.) However, if SWM is not the way for business enterprises to make the maximum contribution to society, many aspects of financial analysis and decision making will have to change to be consistent with this new, emerging finance. Business schools will need to revise the way finance is taught, and correspondingly, new finance textbooks will be required. This paper discusses the development of a new financial management textbook that begins with the assumption that the role of all business enterprises is to serve society in multiple dimensions, not only economic. This broader vision of the purpose of the firm is a significant theme within Pope Francis’ encyclical Laudato Si as well as in numerous other Jesuit and catholic writings and actions and in the commitments to social innovation and social enterprise found on many Jesuit and other University campuses. One well known expression of this is the “Triple Bottom Line,” a measurement system that elevates the management of environmental and social performance to be equal to that of managing financial performance. In the session and paper, we will discuss the new book’s structure and content as well as our experience in using draft chapter outlines in teaching a new course titled “Finance in the Sustainable Organization” at a Jesuit business school in the Spring 2018 term. We plan to turn our drafts into the final book during the 2018-2019 academic year and anticipate presenting it along with our further learnings at the IAJBS 25th World Forum in 2019. In a broader perspective, the paper will discuss how this textbook and other similarly focused textbooks can be used as vehicles for transforming not only finance teaching and research, but also all of business education and all of business practice. In addition to being considered for inclusion in a paper session, we also request to be considered, if possible, for a longer interactive session with conference attendees with the intent of learning from them and incorporating their insights and feedback to improve the book.