Customer Reviews

Principles of Corporate Finance(R) + Student CD + Corporate Governance Trade Book + Standard & Poor's + Ethics in Finance PowerWeb

5 star:		(26)
4 star:		(17)
3 star:		(8)
2 star:		(9)
1 star:		(17)

 

 

Wow. People love or hate this book. I love this book but I can where some people might object.

Why I love it: It is well written, it has many examples, it covers many subjects, it has a sense of humor (many reviewers do not have a sense of humor) and I found myself referencing this book as I took subsequent quantitative-oriented classes in my MBA program.

Why some people may hate it: 1. European MBA programs are much more quantitatively oriented. The MBAs from Belgium and London tell me that 50% of their grade in most classes requires proving or deriving a formula. This book won't tell you how to do that or address those hairy mathmatical models. 2. Finance practitioners, options traders, investment bankers aren't wild about this book. It is not in-depth quantitative in its nature. I don't believe practitioners should be reading a general book such as this. If they are reading this book, then this should be only one of several works they should be reading. 3. Finance is hard work! Most of my MBA peers were blindsided by the amount of effort required by the class (as I was). Even the Sr. financial analysts in my class were challenged by the work. If you're not sharp on your math skills, your finance class will make you choke! Any book that would purport to tell you everything you need to know for a basic corp. finance class would be a multivolume set! Don't demand miracles from one textbook!

Do yourself a favor: If you do use this book or subsequent volumes, purchase the study guide and solutions guide as well! And attend teaching assistant sessions if you can!

About CAPM, APT and WACC: they are addressed in this book. Maybe not to the extent that they should be, but then again, this book is a survey of issues. My prof spent lots of time on those subjects even though the book did not.

I first came across the second edition of this book while I was an MBA student in the mid-1980s. At that time, I thought that this book was superb. Since that time, I have gone on to get a Ph.D. in Finance and currently teach MBA students and have taught advanced undergraduate students. I have consistently chosen to use this textbook simply because it's the best textbook in corporate finance that money can buy. Brealey and Myers raised the bar phenomenally when they published the first edition of their book. Every time they come out with a new edition they update the contents with the new research that's published (they exercize great wisdom in judging what new research is important--the finance community can thank them for that). The pedagogy is excellent, the exercizes are great, the examples are relevant, and, despite what some of the other reviewers have stated, the humor is good (heck, this is the only corporate finance textbook that even has humor in it).

What about the customer reviews that have trashed this book? Based on my number of years of teaching experience, I have found that some students have a difficult time with this book. I also find that these students are ill-prepared to take a course in corporate finance and don't have an understanding of basic statistics or accounting or economics. So if you are ill-prepared for a rigorous course in corporate finance, this book is not for you. As for the reviewer who claims that the CAPM and arbitrage pricing theory are missing....that's simply a false statement.

Bottom line: This is a fantastic book and it is used as a textbook in core MBA finance courses at all the good universities like Chicago, Harvard, MIT, Wharton, etc.

It's disappointing to see so many complaints from other reviewers about what is the most eloquent and useful fundamental corporate finance text. I've used the Ross & Westerfield text, too, but B&M sets the standard.

B&M is an excellent book... and I say this six years after my initial corp fin course in the Chicago MBA program. I've been working in the field now for five years in several capacities and still use this book regularly. In fact, when I drafted an in-house valuation course for my FORTUNE-5 employer recently I found myself returning to B&M repeatedly to review first principles.

Corp. finance is (and should be) inaccessible to someone unwilling to master statistics, financial accounting and the theoretical foundation provided by Miller & Modigiliani, Markowitz, Fama, Roll et. al. Yet it's not a science; it is an art informed by rational academic inquiry and the invaluable feedback of practitioners. That's what makes it beautiful.

Those lacking the diligence to wade through the thought problems of the M&M theorems, the development of CAPM and APT, the relevance and shortcomings of DCF analysis, and guidelines for proper investment economics can't possibly expect to practice finance intelligently.

And that's my biggest complaint about financial professionals. Many don't understand the genesis of economic value because they don't grasp the fundamental arguments that B&M make so clearly. At a time when the blather of CNBC reigns, Wall Street analysts still hype EPS and stock splits, and everyone from stockbroker to accountant calls himself a financial analyst this text is more necessary than ever. Learn it cover to cover and you're ready to move on to further complexity in the field. And there's a lot of further complexity in the field.

One final point... the bane of MBA programs is the baying of students for "real world examples." Students need to understand that a grasp of fundamental theory, peer reviewed and tested, forms the foundation necessary to work intelligently in finance. Otherwise we're just suits flipping switches on a powerful machine the intricacies and nuances of which we can't even begin to grasp. And destroying a lot of economic value in the process.

The new edition of Brealey & Myers's classic introductory text on corporate finance is still the best. This is the book used by top universities and business schools for a first course on capital markets and corporate finance. The strengths of the book are: breadth (see the table of contents for the large number of topics covered), practicality (you learn the theory and also how to apply theory in practice), and clarity (very easy to follow). The student does not need prior knowledge to understand the materials.

When I worked on Wall Street all my colleagues had a copy of Brealey and Myers. The new edition updates the text (I have not found any major changes). A must-have for those interested in the basics of corporate finance. Also a good refresher for seasoned professionals (but you already knew that!).

Do not be too confused by comments of other reviewers. This book is definitely 'not' the bible for people having finance as a major. What the book presents, is an excellant introduction to understand the principles of corporate finance. And nothing more is claimed by the authors anyway. I have used the book during my first course in finance at one of the Top-3 American Business Schools. The book provided me with an excellant introduction over a variety of CF topics, though I have to admit that (having a Ph.D. in engineering) I missed the math part in it. So, do not look for proofs, etc., but just use it to get the bigger picture of what CF is about. If you are seriously interested in pursueing a carrier in CF, you will anyway come across other books with more mathematical depth. If it turns out that CF is nothing for you, you can still use the book as reference later on in your professional carrier, since it is easy to look up things without remembering heavy-math stuff.

The wide range of reactions to this textbook simply indicates the fact that it is NOT actually a good introductory text for the typically diverse MBA student mix found in any intro-level course. Yet that is PRECISELY the usage for which it is known: intro-level corporate finance classes in MBA programs. My MBA program also used B&M, but a group of us simultaneously volunteered for a focus group run by the publisher of Aswath Damodaran's excellent Corporate Finance textbook. We followed the Damodaran text alongside our B&M text for the entire semester. At semester's end EVERY SINGLE MBA IN THE FOCUS GROUP preferred Damodaran's text -- and the group contained electrical engineers with graduate degrees and former I-bank analysts as well as former ballet dancers and journalists. Damodaran is an award-winning finance professor at NYU. B&M is heavy on the academic scholarship, far removed from the real hurley-burley of Wall Street, and despite the humour (which I did enjoy) it cannot successfully meet the needs of a broad range of students. Yet it continues to be used for just that purpose -- indeed, my MBA alma mater ignored the student feedback and continues to use B&M, the professors' darling... If you are suffering with this text, do yourself a favour and get Damodaran's, which is a text designed to TEACH by a professor who truly cares that ALL his students master corporate finance.

There is a great controversy about this book. From my point of view, the problem stems from reader's expectations. If you are looking for a manual introducing you on main issues of Corporate finace, this is your book (It's a workbook for introductory courses in CF). If you are looking for a deeper insight into them, this book will disappoint you. It has a poor mathematical treatment and it's overly superficial. Satisfaction = performance - expectations.

This Brealey and Myers's textbook, now in its 7th edition, introduces the student to the fascinating world of corporate finance. The first few chapters of the book demystify Net Present Value, the preferred method for calculating the value of an investment project. Brealey and Myers then explain how risk and return are related and introduce the Capital Asset Pricing Model. The CAPM's strengths and weaknesses are both explored in detail. The authors continue by analyzing the significance of dividend policy and debt policy for a corporation -- including the rather surprising result that in perfect markets these just don't matter! The next topic is options, financial and real; major pricing models are covered, and warrants and convertibles get a fair treatment, too. The remaining parts of the book deal with a variety of topics such as valuing debt, managing financial risks, financial planning as well as mergers and corporate governance.

At 1071 pages, Principles of Corporate Finance can hardly be called a short book. Introductory textbooks often suffer from a "too-much-too-little" syndrome, in that numerous topics are covered, but none too well. Brealey and Myers easily avoid this pitfall. Their writing is solid and manages to keep the reader's interest. Although available space puts a limit on what can be said, the book's coverage is quite comprehensive and well linked to the results of modern research. Moreover, all topics receive their fair share of treatment so you can actually understand the theories the book presents. It should be noted here that some mathematical background is probably necessary to make the book easy reading.

Each chapter contains many problems which can be used to facilitate the learning process. I found them very useful. The only complaint I have about the book (International Edition) is that the binding proved less than perfect, as after a while pages started separating from the main body of the work. But that is a problem I can live with.

All in all, an interesting, readable, authoritative introduction to corporate finance.

There should be two categories for reviews of this book. One is for those are looking for a review or reference and one for those who are learning the material for the first time. This review takes the latter perspective. If this is your first time learning the material, this book is pretty good at some things and pretty awful at others. My rating of 3 stars is an average score of 2 main categories of corporate finance
- Project Investment Decision (NPV/ Capital Budgeting/Project Valuation/ Real Options) - 5 Stars - The book does a very good job here. This is somewhat mechanical and by doing problems, one can understand and master this important material on one's own.
- Capital Structure (obtaining the money for these investments, paying dividends, and how these decisions about debt/ equity affect the value of the firm) - 2 stars. The book does provide some intuition for these economic concepts, but overall the coverage is poor. The problems at end of the chapters are poor and do not drill in these important concepts. I found Donald Chew's New Corporate Finance to be an excellent complement. By reading this collection of articles one can easily grasp how these academic concepts are used in the real world.

I had to read a few chapters from this book for one of my finance classes. At first I was very skeptical of the text because of the authors' obsession with CAPM, beta, and modern portfolio theory. These concepts make no sense at all. They only serve to illustrate that even the most elegant mathematical models of the world have little practical value if the underlying assumptions are wrong. Very soon, however, my initial prejudice towards the book began to disappear. Eventually, I read the entire textbook, which wasn't required by my instructor. I still believe that CAPM and modern portfolio theory are all wrong but I was fascinated by authors' extensive discussion of NPV and Capital Structure. NPV, indeed, is the only proper way to value any business venture and no compromise can be made in this respect. Brealey & Myers got that one right.
The book is well written and most of the examples and explanations are easy to comprehend. I don't understand those reviewers who complain that the book is boring and hard to read. It is not. If it were then I wouldn't spend time reading it during my summer vacation.
I was even more puzzled by those reviewers who complain about the lack of rigorous mathematics in the book. As if calculus is the only meaningful way to explain a concept. This may be so in Quantum Mechanics and Chemical Engineering but it is not in Business. Finance is not a science but and art anyway. Warren Buffet once said that:
"If calculus were required, I'd have to go back to delivering papers. I've never seen any need for algebra either."
(The gentlemen from England, who complain about the lack of rigorous mathematics, probably have never heard about Warren Buffet. That's sad!)