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Finance Theory: A House Without Windows

Lookup NU author(s): Professor Robert Hudson


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In this paper we aim to build on the existing critical finance literature by exploring how finance theory maintains both its momentum and hegemony. More specifically, by using an example at the core of finance theory (namely, portfolio asset allocation) we illustrate how finance keeps itself artificially alive by taking data from the outside world, often ignoring the rich complexities of the context which has given rise to the data, and using these ‘new facts’ to create puzzles which then lead onto more activity to see how the accepted core can or cannot be extended to incorporate the ‘new facts’. Against this process the paper then shows how the more obvious approach of engaging with the various participants can lead to greater insight and understanding. Given this approach, facts are not just anomalies which need to be explained away but part of the environment which help us to understand the various activities of individuals and organisations. The paper concludes by outlining a research agenda which develops a number of streams of research in critical finance and needs to be addressed in an open manner if traditional finance is to move from being closed and increasingly moribund to a subject which captures the vibrancy and dynamism of financial activities/markets across the globe.

Publication metadata

Author(s): Keasey K, Hudson R

Publication type: Article

Publication status: Published

Journal: Critical Perspectives on Accounting

Year: 2007

Volume: 18

Issue: 8

Pages: 932-951

ISSN (print): 1045-2354

ISSN (electronic): 1095-9955

Publisher: Academic Press


DOI: 10.1016/

Notes: Winner of Emerald Citation of Excellence for one of 50 best papers in management in 2007.


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