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Theory of Corporate Finance (ISE)

by Jean Tirole
Pub Date:
Hbk 656 pages
AU$113.00 NZ$119.13
Product Status: In Stock Now
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& Academics:
Co-author Jean Triole won the 2014 Nobel Prize in Economic Sciences.

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
Co-author Jean Triole won the 2014 Nobel Prize in Economic Sciences.

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. It includes 138 illustrations and 25 tables.

'Using a single elementary model Tirole brings out with refreshing ease an unsuspected unity and simplicity in a field that might otherwise be perceived as dishearteningly fragmented and complex. This masterful book will be a formidable teaching tool at the graduate level and an essential reference for research in corporate finance.'-- Marco Pagano, Professor of Economics, University of Naples Federico II

Co-author Jean Triole won the 2014 Nobel Prize in Economic Sciences.

'The field of corporate finance has developed rapidly and extensively in the last twenty years, but those who want to teach it face a barrier: the absence of a widely accepted textbook. Jean Tirole's book fills that gap. Applying his celebrated analytical and expositional skills, Tirole synthesizes and unifies the field in a clear and accessible manner, emphasizing particularly the connections between corporate finance and contract theory and the role of incentives and control in firms' financial decisions. The result is a book that will be an important resource for students and teachers alike.'-- Oliver Hart, Andrew E. Furer Professor of Economics, Harvard University

'With this book, Tirole has provided a comprehensive treatment of modern corporate finance theory in one place with one integrated framework. As a bonus, he also describes many of the important empirical results in corporate finance and how they relate to the theories. The book will be a valuable asset to students (and professors) of corporate finance.'-- Steve Kaplan, Neubauer Family Professor of Entrepreneurship and Finance, University of Chicago Graduate School of Business

' a magnificent new book, 'The Theory of Corporate Finance', by Jean Tirole, of the University of Toulouse. This is far more than the mere textbook it purports to be: it has a plausible claim to be the first truly comprehensive overview of corporate finance by an economist.' - The Economist, 9th February 2006


I. An Economic Overview of Corporate Institutions
1. Corporate Governance
2. Corporate Financing: Some Stylized Facts
II. Corporate Financing and Agency Costs
3. Outside Financing Capacity
4. Some Determinants of Borrowing Capacity
5. Liquidity and Risk Management, Free Cash Flow, and Long-Term Finance
6. Corporate Financing under Asymmetric Information
7. Topics: Product Markets and Earning Manipulations
III. Exit and Voice: Passive and Active Monitoring
8. Investors of Passage: Entry, Exit, and Speculation
9. Lending Relationships and Investor Activism
IV. Security Design: The Control Right View
10. Control Rights and Corporate Governance
11. Takeovers
V. Security Design:: The Demand Side View
12. Consumer Liquidity Demand
VI. Macroeconomic Implications and the Political Economy of Corporate Finance
13. Credit Rationing and Economic Activity
14. Mergers and Acquisitions and the Equilibrium Determination of Asset Values
15. Aggregate Liquidity Shortages and Liquidity Asset Pricing
16. Institutions, Public Policy, and the Political Economy of Finance
VII. Answers to Selected Exercises

"Jean Tirole has provided the profession with its first comprehensive, advanced treatment of corporate finance theory. . . . [T]he overall result is far from idiosyncratic and it will have a major impact upon teaching and research in corporate finance."---David Webb, Economic Journal
Jean Tirole is Scientific Director of the Institut d'Economie Industrielle at the University of Social Sciences in Toulouse, one of Europe's leading centers for the study of economics. He is also affiliated with the Massachusetts Institute of Technology, where he holds a visiting position, and Paris Sciences Economiques. He is a past president of the Econometric Society and the European Economic Association. Tirole is the author or coauthor of eight books, including Financial Crises, Liquidity, and the International Monetary System (Princeton), The Theory of Industrial Organization, Game Theory (with Drew Fudenberg), and A Theory of Incentives in Procurement and Regulation (with Jean-Jacques Laffont).