Equity Capital ─ From Ancient Partnerships to Modern Exchange Traded Funds

Modern equity security valuation is a vast subject. In the academic realm, the subject spans the areas of Accounting, Finance and Economics, with business schools offering a number of courses dealing with different aspects of the subject. Discussions directly related to equity security valuation are pervasive in the popular media, but despite this widespread general interest, there are relatively few historical treatments of the subject available that conform to academic standards.A History of Equity Capital Valuation looks to address this imbalance in the literature by presenting historical approaches to the valuation of equity securities.

This book approaches equity valuation history in five main parts. The first part deals with equity valuation from ancient times to the emergence of tradeable equity claims in joint stock companies in the early 17th century; equity valuation during much of this period was concerned with determining the value of shares in a partnership or similar commercial venture. The second part focuses on the evolution of joint stock valuation from the trading in early 17th century Amsterdam until the advent of limited liability companies in the mid-19th century, with coverage of two important equity valuation events: the Mississippi scheme and the South Sea Bubble. The third part deals with the evolution of equity valuation methods to encompass the tradeable shares of large, limited liability commercial operations that emerged following the Industrial Revolution. This part ends and the final part commences with the 1929 stock market crash that culminated in the Securities Act (1933) and the Securities and Exchange Act (1934), legislation that marks the beginning of the modern era of equity security valuation, where financial statement analysis plays a critical role. From this point, the book surveys the variety of approaches to the valuation of equity securities that have appeared in the modern era.

A History of Equity Capital Valuation is aimed at providing material relevant for academic presentations of equity valuation history and methods, and is targeted at researchers, academics, students and professionals alike.

Geoffrey Poitras is Professor of Finance at Simon Fraser University, Canada.