The Theory of Corporate Finance
By Jean Tirole


Product Description:

The past twenty years have seen great theoretical and empirical advances in the field of corporate finance. Whereas once the subject addressed mainly the financing of corporations--equity, debt, and valuation--today it also embraces crucial issues of governance, liquidity, risk management, relationships between banks and corporations, and the macroeconomic impact of corporations. However, this progress has left in its wake a jumbled array of concepts and models that students are often hard put to make sense of.
Here, one of the world's leading economists offers a lucid, unified, and comprehensive introduction to modern corporate finance theory. Jean Tirole builds his landmark book around a single model, using an incentive or contract theory approach. Filling a major gap in the field, The Theory of Corporate Finance is an indispensable resource for graduate and advanced undergraduate students as well as researchers of corporate finance, industrial organization, political economy, development, and macroeconomics.
Tirole conveys the organizing principles that structure the analysis of today's key management and public policy issues, such as the reform of corporate governance and auditing; the role of private equity, financial markets, and takeovers; the efficient determination of leverage, dividends, liquidity, and risk management; and the design of managerial incentive packages. He weaves empirical studies into the book's theoretical analysis. And he places the corporation in its broader environment, both microeconomic and macroeconomic, and examines the two-way interaction between the corporate environment and institutions.
Setting a new milestone in the field, The Theory of Corporate Finance will be the authoritative text for years to come.



Summary: an enchiridion on corporate finance
Rating: 5
This book is the best enchiridion for any kind of studies in finance. All students are advised to read it;they will find it useful, not only due to its deep and scrutable meanings, but also because it awakes profound questions to the reader and urge him to make his own research on a sector in finance which is still in its infancy.
This handbook helped me a lot with my dissertation, as it concentrates in its pages various and many topics on corporate finance.


Summary: Excellent Theoretical Approach
Rating: 5
Even a few years ago the theory of corporate finance was relatively simple. To be sure, everyone knew that the models weren't perfect. The close cooperation between favorite trading partners and/or between companies and their governments, the impact of taxes, currency issues, and a whole raft of financing instruments that never existed before has forced drastic changes in the basic theories of corporate financing.

This book employs a single, elementary model in order to illustrate the main economic insights. While this approach doesn't take into account all of the various extentions that more complex models might give, it is much easier for the student to get accustomed to one model and then to modify it as circumstances warrent.

This book is aimed at the advanced undergraduate student, or more likely one at the graduate level. While not nearly as mathematically oriented as some books, this one does include enough that the student should consider calculus as a prerequisite.

All in all, this book does a supurb job of developing a theory that reflects the real world as it exists today.


Summary: Superb
Rating: 5
Tirole's book is one of the very few formal texts to cover corporate finance theory. It is structured around a few basic models which are changed/extended in myriad ways in order to illuminate this or that topic. This allows the reader to cover a lot of ground with minimal investment.

I have taught a master's level finance course based on the notes that the book is built on and found it a pleasure.

I found it useful to cover some basics of principal agent theory before covering Tirole's material, as some knowledge of information economics is assumed. Laffont and Martimort's book makes the transition smooth as they essentially use the same basic two action two outcome setup as Tirole's first couple of chapters.

I very much doubt that a superior book will appear on the shelves for some time, that is of course, until Tirole decides to update his text some years from now.


Summary: Good PhD book
Rating: 5
This is definitely a good PhD-level book on Corporate Finance. It is based on Jean Tirole's lecture notes at Toulouse and definitely follows his research style. It uses theoretical models with agency problems to explain several empirical findings of corporate finance. A great purchase for grad students interested in financial THEORY.