Q&A: What is “the” most important treatise written in the history of financial management?

Question by Synderella Synergy: What is “the” most important treatise written in the history of financial management?
What is was about that which helped your decision.

Best answer:

Answer by simplicitus
Depends how general you want to be.

My first choice would be: “On the Calculation with Hindu Numerals by Al-Khwārizmī”. I can’t imagine the pain of trying to do financial management with Roman Numerals.

My second choice would be Luca Pacioli’s textbook “Everything about Arithmetic, Geometry, and Proportions.” which taught double-entry accounting to Europe (the Islamic cultures had been using it for hundreds of years before that)
In theory it might be possible to use double-entry accounting with Roman numerals, but it would be very hard, which is why this is #2 and not #1. On the other hand, the Romans did have primitive accounting methods of their own:

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One Response to “Q&A: What is “the” most important treatise written in the history of financial management?”

  1. I didn't do it! says:

    If ‘important’ means ‘influential’ I would consider the following papers equally important for the development of modern financial management:

    Markowitz, H.M. (March 1952). “Portfolio Selection”. The Journal of Finance 7 (1): 77–91. Developed a framework to maximize the return of a portfolio of financial assets for a given level of portfolio risk.

    Sharpe, William F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk, Journal of Finance, 19 (3), 425-442. Developed a model to determine the required return of an asset based on the risk level of that asset and compared to the overall market.

    Black, Fischer; Myron Scholes (1973). “The Pricing of Options and Corporate Liabilities”. Journal of Political Economy 81 (3): 637–654. Developed a mathematical model to price options and other derivative, non-linear financial instruments.

    Modigliani, F.; Miller, M. (1958). “The Cost of Capital, Corporation Finance and the Theory of Investment”. American Economic Review 48 (3): 261–297. Deals with the capital structure of a company and suggests that under certain assumptions it does not matter whether a firm is financed through debt or equities.

    Eugene F. Fama (1970). “Efficient Capital Markets: A Review of Theory and Empirical Work”. Journal of Finance (The Journal of Finance, Vol. 25, No. 2) 25 (2): 383–417. May 1970. Developed the Efficient Market Hypothesis. Controversial concept that the stock prices (or certain other asset prices) fully reflect all the information available for the asset; it is therefore not possible for an investor to outperform the market if the market ifs efficient.