THE TRANSFORMATION OF BUSINESS FINANCE INTO FINANCIAL ECONOMICS: THE ROLES OF ACADEMIC EXPANSION...

Abstract Financial economics combines a high degree of theoretical abstraction and formality with considerable empirical uncertainty and strong connections to financial institutions and employers. This unusual combination is the product of academic expansion in the leading U.S. post graduate business schools and their attempt to acquire intellectual legitimacy by encouraging scientific research, on the one hand, and of changes in the organization of U.S. financial markets, especially of investment analysis and management, on the other hand. This paper discusses the dominant characteristics of financial economics as an intellectual field and how these contextual factors shaped its emergence.

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