Principles of Corporate Finance, 14th Edition
Richard A. Brealey, Stewart C. Myers, Franklin Allen, Alex Edmans
Print: 9781265074159/ Ebook: 9781265652463
The latest in the Principles of Corporate Finance dynasty, serving the best business programmes in the world for decades, the 14th edition continues in its tradition of showing how theory applies to the very practical problems and decisions faced by financial managers.
Looking at what financial managers do and why, the book aims to give readers a solid understanding of theory so that they know what questions to ask when times change and new problems need to be analysed, eventually standing as a reference and a guide to help them make financial decisions, not just study them.
This new edition welcomes Alex Edmans to the author team, whose global authority and expertise in corporate governance, responsible business and behavioural finance have been invaluable in bolstering coverage of these topics.
What's new?
Responsible Business
The idea that companies should promote the interests of all stakeholders rather than simply seeking to maximize shareholder value is an important one. The new edition includes a new chapter that discusses these different corporate objectives, how far they conflict, and how a responsible business should behave.
Market Efficiency
The discussion of market efficiency has been substantially revised, with an expanded discussion of behavioural finance and the evidence for behavioural biases, challenging the Efficient Markets Hypothesis/Rational Economic Man assumption that has pervaded thinking for decades.
Going Global
As the modern finance manager works in a global environment, they need to understand the financial systems of other countries. Recent editions have progressively introduced more international material, and this edition features material on international differences in financing as well as discussion of governance systems around the world.
Content changes
In addition to the usual revisions you would expect, such as up-to-date examples, figures and discussion of current events, new author Alex Edmans brings to the book his expertise in the areas of corporate governance, responsible business and behavioural finance. Content changes include:
- New chapter dedicated to stakeholder capitalism and responsible business.
- Reorganisation of the material on corporate governance so that it sits logically with material on corporate objectives since the two are inextricable.
Greater integration of material on international differences in financing and greater discussion of governance systems around the world. - Substantial revision of the market efficiency chapter, with new evidence on behavioural finance and an expanded discussion of its implications for financial managers.
- A clearer separation between portfolio choice and a stock’s effect on portfolio risk and asset pricing.
- A new section looking specifically at how financial innovation today is driven by technological developments such as artificial intelligence, big data, and cloud computing, and the impact this has on practice.
Pedagogical changes
- Every effort has been made to explain the material much more clearly to make it accessible to the non-finance reader – importantly, without dumbing it down. Terms are precisely defined and key concepts made explicit rather than having to be inferred from the narrative.
- Each chapter is now prefaced with an overview of the chapter’s content to aid in navigation and facilitate learning.
- Chapters now also conclude with key takeaway bullet points summarizing the chapter’s principal lessons.
- Each chapter is interspersed with new self-test questions that provide an opportunity for readers to pause and check their understanding.
- Additional examples, anecdotes, spreadsheet programs, more thorough explanations and practice examples are available online for some topics giving students the option to dig deeper ‘beyond the page.’
New in Connect®
- Excel simulations to help students learn and practise using common Excel functions and formulas – now with Integrated Excel.
- Application-Based Activities (ABAs) for students to apply their knowledge & problem-solving skills in realistic scenarios.
- Sample CFA questions: over a thousand additional questions for the CFA exams in partnership with Kaplan Schweser.
- Finance prep courses for students who need a little extra help covering the basic concepts in Maths, Statistics, Accounting, Excel, and Economics.
- New and updated end of chapter problems
- Remote proctoring and browser-locking capabilities
Click here to view a sample chapter
About the authors
Richard A. Brealey
Emeritus Professor of Finance at London Business School. He is the former president of the European Finance Association and a former director of the American Finance Association. He is a fellow of the British Academy and has served as a special adviser to the Governor of the Bank of England and director of a number of financial institutions. Other books written by Professor Brealey include Introduction to Risk and Return from Common Stocks.
Stewart C. Myers
Emeritus Professor of Financial Economics at MIT’s Sloan School of Management. He is past president of the American Finance Association, a research associate at the National Bureau of Economic Research, a principal of the Brattle Group Inc., and a retired director of Entergy Corporation. His research is primarily concerned with the valuation of real and financial assets, corporate financial policy, and financial aspects of government regulation of business. He is the author of influential research papers on many topics, including adjusted present value, rate of return regulation, pricing and capital allocation in insurance, real options, and moral hazard and information issues in capital structure decisions.
Franklin Allen
Professor of Finance and Economics, Imperial College London, and Emeritus Nippon Life Professor of Finance at the Wharton School of the University of Pennsylvania. He is past president of the American Finance Association, Western Finance Association, Society for Financial Studies, Financial Intermediation Research Society, and Financial Management Association. His research has focused on financial innovation, asset price bubbles, comparing financial systems, and financial crises. He is Director of the Brevan Howard Centre for Financial Analysis at Imperial College Business School.
Alex Edmans
Professor of Finance at London Business School and Mercers School Memorial Professor of Business at Gresham College. He is also Managing Editor of the Review of Finance and was previously a tenured professor at Wharton, where he won 14 teaching awards in six years. His research focuses on corporate finance, responsible business, and behavioral finance. He has spoken at the World Economic Forum in Davos, given the TED talk “What to Trust in a Post-Truth World” and the TEDx talk “The Social Responsibility of Business”; he is also advisor to several investment management companies. He is the author of Grow the Pie: How Great Companies Deliver Both Purpose and Profit. Poets & Quants named him MBA Professor of the Year for 2021.
Transform learning: boost grades, stimulate engagement and deliver an amazing course
Connect is an online platform integrating ready-made course content with assessment and tools. The platform uses the most established adaptive digital technology to deliver a more effective learning experience for both students and educators across over 90 disciplines.
Connect has changed the paradigm from students adapting to the classroom to education adapting to each student. Connect’s interactive technology provides each student with a tailored learning journey enabling them to learn at their own pace and in their own way.
Principles is also available with Smartbook through the Connect platform.
Smartbook is an adaptive, interactive eBook that allows you to assign readings and track student engagement, so you know whether they are coming prepared to class. In addition, quiz questions throughout the chapters test students’ understanding, orienting them to topics they need to review, while providing you with actionable insight data.
The Connect Application-Based Activities (ABAs) provide students valuable practice using problem solving skills to apply their knowledge to realistic scenarios. Students’ progress from understanding basic concepts to using their knowledge to analyse complex scenarios and solve problems. Available ABAs for corporate finance include:
| The Goals and Activities of Financial Management | Current Asset Management | Risk and Capital Budgeting |
| Review of Accounting | Sources of Short-Term Financing | Capital Markets |
| Financial Analysis | The Time Value of Money | Investment Banking |
| Financial Forecasting | Valuation and Rates of Return | Long-Term Debt and Lease Financing |
| Operating and Financial Leverage | Cost of Capital | Dividend Policy and Retained Earnings |
| Working Capital and the Financing Decision | The Capital Budgeting Decision | International Financial Management |
Prep Courses in Connect cover the basic concepts in Math, Statistics, Accounting, Excel, and Economics and are comprised of animated tutorial modules with quiz questions. NEW to the list is CALCULATOR. Instructors can assign as homework or include for optional practice. Prep Courses provide a level playing field, give instructors more time in class to cover personal finance topics, and ensure that students are not left behind.
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*Please note that the printed book won't be available in for delivery until June. We recommend requesting an e-sample so you can review it as soon as possible.