Customer Reviews

Financial Markets & Corporate Strategy

5 star:		(5)
4 star:		(3)
3 star:		(0)
2 star:		(6)
1 star:		(5)

 

 

I will admit this book does not take the standard approach to learning corporate finance. The authors discuss a wide variety of common topics, ranging from market models, option valuation, capital structure concepts and decisions, to more specialized topics such as corporate governance and financial risk management.

What is unique about this book, though, is that the authors encourage students to think about problems more broadly than one often sees in introductory texts and courses. For example, the authors encourage the use of decision trees (i.e. binomial models) to value a wide range of assets, not just stocks. If one can value a stock option using a binomial tree, why not use the same framework to value a plot of undeveloped real estate, an untapped mine, or any other "real option" owned by a company?

Another reason this text is excellent is because the authors include a vast survey of recent financial and economic literature relevant for the financial decision-maker. Highly developed markets depend on the signaling of information between investors and management, creditors and debtors, customers and suppliers, and so forth; understanding the implications of these interactions and their subsequent effects is of primary importance to decision-makers.

For example, the "pecking order" theory of capital structure is one of the most well-known concepts in finance, but nonetheless often misunderstood (if you want proof of this, why did investors respond so enthusiastically to every IPO in the late 1990's?). Instead of glossing over an explanation of the theory, the book thorougly explains it and provides problems where the reader can actually work through a simplified model that really reinforces the concept.

While this book served as a good introduction to a wide scope of problems in finance, it was most useful because it helped me to apply economic tools not just to solve but to understand financial problems. The use of decision trees in the simplified, binomial model setting helped me to understand option/project valuation and risk-netural valuation, the linchpin of no-arbitrage pricing. It also has perhaps the most thorough, lucid explanation of Arbitrage Pricing Theory (APT) I've seen anywhere- for a practitioner trying to understand factor models, this chapter alone makes the book worth it.

I understand that this is a very difficult book and that the problems are beyond what one may expect in a MBA-level course. Nonetheless, finance is an increasingly competitive field whose employers are starting to demand more analytical skills and intiution from recent graduates. In response to the reviewer who said this text is not suitable for CFA preparation, I do agree with that sentiment. First, the CFA program is designed for self-study that any motivated and capable professional can handle, while Grinblatt/Titman is clearly appropriate for a rigorous MBA-level sequence in corporate finance. Second, the CFA exam emphasizes asset valuation and portfolio management, while this book stresses financial decision-making from a manager's standpoint.

While I normally don't like reviews that justify their opinions by offering credentials, I also work on Wall Street and I find the concepts taught in this book to be quite relevant in handling real-world problems.

I bought this book as a recommended supplemental text for a course in Corporate Finance in the MBA program at the U of Michigan Business School. I am very glad to have this book on my shelf of financial books and have benefited from it more than once.

I can recommend it to you strongly by praising it for these reasons:

1) It puts practical flesh on the financial model bones you learned in your first course on finance. There are very good discussions of the basic and well-known fundamental theories and models, but the authors also share with us what tends to happen in the real world. And isn't that what each of us need to add to our theoretical thinking?

2) Each chapter has effective summarizing Key Concepts and Key Terms with plenty of problems to work through and a list of References and Additional Readings that enable the reader to dive deeper into the topic of the chapter just read.

3) The book is helpfully organized into six Parts that provide the framework for the discussion. Parts 1-3 are a review of "Financial Markets and Instruments", "Valuing Financial Assets", and "Valuing Real Assets". This foundation gives the student a good grounding in order to see how these principles are used in the work of managing the capital structure of a corporation. Parts 4-6 discuss the "Corporate Financial Structure", "Incentives, Information and Corporate Control", and "Risk Management". These last three sections are the real meat of the book and where a great deal of its value to the business student lies.

4) Each of the Parts has an effective and brief introduction that sets the tone for what is to be studied. Even better, at the end of each the six Parts there are two very helpful summary sections: "Practical Insights" and "Executive Perspective".

This is a specialized topic. But it is an important topic. This is a very good book that can help a serious student get grounded in some very important principals necessary to managing the financial issues facing every corporation. I recommend it.

I am a postgraduate student in finance and this book is on my reading list for corporate finance. I must say that I am not very pleased with this book. First, it seems to skip around from chapter to chapter with no real logical organizational structure. Second, it is full of typos and mistakes -- some that are quite dangerous for a proper understanding of the material. Third, it does not develop fully the statistically techniques in Chapter 4 that it builds on in later chapters. This is a major problem in my opinion. What saves this book from the lowest rating is that it does discuss empirical studies and journal articles, and it does not do an entirely awful job about the more qualitative subjects like adverse selection and capitalization policy.

For what it's worth, I received my undergraduate degree at Wharton and am now at the London School of Economics. Instead of this book, I recommend Brealey and Myer's Principles of Corporate Finance. This is what I used as an undergraduate and is what seems to be the de facto textbook in the top undergraduate and MBA programs.

N.

I used parts of this book in finance courses at the University of Connecticut and found it to be clear, concise, and quite readable. The numerical examples were useful, if occasionally a bit disjointed. I would recommend the book as a good MBA level text.

This was one of the supplemental finance texts required during my MBA course and is by far one of the most complete and practice oriented texts in the subject. . Make no mistake, this is not an introductory text. The author's quickly glance over basic corporate finance - NPV, Debt/Equity financing and the like. Where the book starts shining, is in the 2nd part where one see's an excellent treatment of Portfolio Management moving into CAPM and then onward to Multi-factor models and Arbitrage Pricing Theory. The latter is probably the best introduction that I have seen to tracking portfolios and factor betas. The authors encourage you to apply these concepts with practical, thought-provoking problems that any asset manager is likely to tackle on a daily basis. Part 2 ends with an intermediate level treatment of derivatives like futures and forwards. This basis is recommended before diving into the John Hull's book.
The author's then move on to discuss a wide breadth of advanced topics from asset valuation, bankruptcy financing, and Mergers and Acquisition and interest rate risk hedging. Each chapter is chock full of great problems that force you to go back to the text and try to apply the concepts demonstrated by clearly worked-out examples.

In the broader landscape of Finance books, I would place it on the same pedestal as Damodaran's excellent book on Valuation and Hull's classic reference on Options. You cannot go wrong making an investment in this book.

I am a university professor in Mexico. I have used this book in the past, but students dont seem to be engaged or to fully follow on what the book covers. It is a long and dense read. This is not a bad textbook, but there are better ones out there! If you want a Corporate Finance textbook stick to Brealey & Myers or Ross & Westerfield textbooks on Corporate Finance. If you want to study/teach Corporate Financial Strategy (what instruments to use and how/when to use them) then consider "Corporate Financial Strategy", Third Edition by Ruth Bender. Bender provides an incredibly easy read that is current and engaging. I have switched from Grinblatt to Bender and the class has dramatically improved!

I won't touch almost all of the topics in the other posts of this rating (they are almost all 100% correct)... but one.

The amount of typos and other mistakes in this text is appalling. I don't think the authors did any of the customization on the European edition. This has got to be the (embarrassing) work of one of their (most untalented) students..

and it's boring...

gave it +1 star - it's got the perfect dimensions as a door stopper.

Not a book for the casual reader or the beginner. It's a great reference for advanced corporate finance but it's a little difficult to understand.

I bought this for a corporate financial policy at the Ross School of Business (Michigan). I read through the assigned chapters during the first couple of classes, but a lot of it was directly overlapping what we talked about in class. It is a good book with easy to understand explanations. If the choice was to use it as a shelf reference it is definitely a buy. I know I will use it after I graduate at my next job. However, if the purpose is just to read it for class and you have a good professor or strong grasp on the material, it is just extra money down the drain.

There's nothing unique about this text - all the topics & discussions have been well covered in other basic textbooks on Corporate Finance, Mergers etc....

The discussions lack depth. The whole concept of Corporate Strategy has been miscontrued by the authors.... The link between this and Financial Markets is very ambiguous & blur!

FYI I'm a businessman & hold an MBA in Finance from an international university.