The latest edition in the Principles of Corporate Finance dynasty, 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 analyzed, 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. A new chapter is entirely dedicated to the subject of balancing shareholder value with promoting the interests of all stakeholders, the potential conflicts inherent in this, and how a responsible business should behave.

There have been several changes to chapter structure as well as expanded discussion of issues that have grown in importance since the previous edition including behavioural finance, and financial innovation driven by AI, big data and cloud computing. It has also grown to take a more international focus, to bring in more information and perspectives on major developing economies such as China and India, and looking at how financing and governance systems differ around the world.  

Table of Contents:

Part One: Value

1: Introduction to Corporate Finance

2: How to Calculate Present Values

3: Valuing Bonds

4: Valuing Stocks

5: Net Present Value and Other Investment Criteria

6: Making Investment Decisions with the Net Present Value Rule

Part Two: Risk

7: Introduction to Risk, Diversification, and Portfolio Selection

8: The Capital Asset Pricing Model

9: Risk and the Cost of Capital

Part Three: Best Practices in Capital Budgeting

10: Project Analysis

11: How to Ensure That Projects Truly Have Positive NPVs

Part Four: Financing Decisions and Market Efficiency

12: Efficient Markets and Behavioral Finance

13: An Overview of Corporate Financing

14: How Corporations Issue Securities

Part Five: Payout Policy and Capital Structure

15: Payout Policy

16: Does Debt Policy Matter?

17: How Much Should a Corporation Borrow?

18: Financing and Valuation

Part Six: Corporate Objectives and Governance

19: Agency Problems and Corporate Governance

20: Stakeholder Capitalism and Responsible Business

Part Seven: Options

21: Understanding Options

22: Valuing Options

23: Real Options

Part Eight: Debt Financing

24: Credit Risk and the Value of Corporate Debt

25: The Many Different Kinds of Debt

26: Leasing

Part Nine: Risk Management

27: Managing Risk

28: International Financial Management

Part Ten: Financial Planning and Working Capital Management

29: Financial Analysis

30: Financial Planning

31: Working Capital Management

Part Eleven: Mergers, Corporate Control, and Governance

32: Mergers

33: Corporate Restructuring

Part Twelve: Conclusion

34: Conclusion: What We Do and Do Not Know about Finance

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.