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Principles of Corporate Finance
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976 pages, Hardcover
First published October 1, 1980
About the author
Richard A. Brealey
155 books26 followersRichard A. Brealey is a British economist and author. He was formerly a special adviser to the Governor of the Bank of England and Visiting Professor of Finance and the Tokai Bank Professor of Finance at the London Business School.
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Displaying 1 - 30 of 42 reviews
August 19, 2013
This is a good introduction into the subject matter. I need to brush up on my knowledge for an upcoming venture and this book allows me to be on speaking terms with my corporate finance partners quickly. It's a pity the publisher won't sell me the answers to the questions in the back. Then again publishers aren't known for their marketing and selling skills.
February 19, 2017
Introduction
Principles of Corporate Finance by Richard A. Brealey and Stewart C. Myers, with subsequent editions incorporating contributions from Franklin Allen and, in more recent editions, Alex Edmans, is widely regarded as one of the leading textbooks in corporate finance. Used in university courses and professional study, it has earned a reputation for combining rigorous financial theory with practical insights into the decisions faced by corporate managers, investors and financial analysts.
The book’s central concern is a fundamental question: how should a company make financial decisions that create value for its shareholders while managing risk and meeting its wider obligations? To answer this, the authors develop a systematic framework for understanding investment decisions, financing choices, risk management and corporate governance. Rather than presenting finance as a collection of formulas, they explain the reasoning behind the methods and demonstrate how financial principles inform real business decisions.
The result is a comprehensive and intellectually demanding textbook that is particularly valuable for advanced undergraduate students, MBA candidates, postgraduate finance students and professionals seeking a deeper understanding of corporate financial management.
Content and Organisation
One of the book’s principal strengths is its logical progression from fundamental financial concepts to more sophisticated questions of corporate strategy and financial policy.
The early chapters establish the foundations of corporate finance, including the objectives of financial management, the time value of money, the valuation of securities and the relationship between risk and return. These concepts provide the analytical tools required to evaluate investment opportunities and understand how financial markets determine the value of assets.
A central topic is net present value (NPV), which provides a framework for assessing whether an investment is expected to create value. The authors explain why investment decisions should be based on the present value of anticipated future cash flows rather than accounting profits alone. This distinction is essential because a project can appear profitable in accounting terms while failing to generate an adequate economic return.
The book subsequently examines capital budgeting, the cost of capital, capital structure, dividend policy and the use of debt and equity financing. It also explores more advanced subjects, including financial options, corporate risk management, mergers and acquisitions, and corporate governance.
This structure allows readers to build their understanding progressively. More complex financial decisions are introduced as extensions of foundational principles, helping students recognise the connections between investment, financing and the overall value of a business.
The Integration of Theory and Practice
The defining characteristic of Principles of Corporate Finance is its ability to connect financial theory with managerial decision-making. The authors do not simply explain how to calculate the value of an investment or determine a company's cost of capital; they explore why these calculations matter and how their results should inform decisions.
For example, the discussion of capital budgeting illustrates how managers can compare competing investment opportunities and determine whether expected future cash flows justify the initial expenditure. The treatment of risk and return demonstrates why investors require compensation for bearing certain risks and how this affects the returns demanded by providers of capital.
Similarly, the analysis of capital structure examines the trade-offs involved in financing a company with debt rather than equity. Borrowing can provide tax advantages and reduce the amount of equity capital required, but excessive indebtedness can increase financial distress and restrict managerial flexibility. By exploring these competing considerations, the authors show why financing decisions cannot be reduced to a universal formula.
This balance between theoretical explanation and practical application makes the book especially valuable. Readers develop not only technical competence but also a framework for evaluating financial choices in situations where information is incomplete and different objectives must be balanced.
Net Present Value and Value Creation
Among the book’s most important contributions is its emphasis on value creation as a guiding principle of corporate financial management.
The authors give particular attention to net present value, which measures the difference between the present value of a project's expected cash inflows and the initial investment, taking account of the appropriate discount rate. A positive NPV indicates that a project is expected to create value under the assumptions used in the analysis.
This approach provides a coherent basis for investment decisions and helps explain why the timing, magnitude and risk of cash flows matter. It also encourages students to distinguish between accounting measures of performance and the economic value generated by a business.
The broader significance of this framework is that it connects investment policy with financing decisions and corporate strategy. A company creates value not simply by expanding its operations or reporting higher profits, but by undertaking investments whose expected benefits justify their costs and risks.
By returning to this principle throughout the text, the authors give readers a consistent analytical foundation for understanding corporate finance.
Principles of Corporate Finance by Richard A. Brealey and Stewart C. Myers, with subsequent editions incorporating contributions from Franklin Allen and, in more recent editions, Alex Edmans, is widely regarded as one of the leading textbooks in corporate finance. Used in university courses and professional study, it has earned a reputation for combining rigorous financial theory with practical insights into the decisions faced by corporate managers, investors and financial analysts.
The book’s central concern is a fundamental question: how should a company make financial decisions that create value for its shareholders while managing risk and meeting its wider obligations? To answer this, the authors develop a systematic framework for understanding investment decisions, financing choices, risk management and corporate governance. Rather than presenting finance as a collection of formulas, they explain the reasoning behind the methods and demonstrate how financial principles inform real business decisions.
The result is a comprehensive and intellectually demanding textbook that is particularly valuable for advanced undergraduate students, MBA candidates, postgraduate finance students and professionals seeking a deeper understanding of corporate financial management.
Content and Organisation
One of the book’s principal strengths is its logical progression from fundamental financial concepts to more sophisticated questions of corporate strategy and financial policy.
The early chapters establish the foundations of corporate finance, including the objectives of financial management, the time value of money, the valuation of securities and the relationship between risk and return. These concepts provide the analytical tools required to evaluate investment opportunities and understand how financial markets determine the value of assets.
A central topic is net present value (NPV), which provides a framework for assessing whether an investment is expected to create value. The authors explain why investment decisions should be based on the present value of anticipated future cash flows rather than accounting profits alone. This distinction is essential because a project can appear profitable in accounting terms while failing to generate an adequate economic return.
The book subsequently examines capital budgeting, the cost of capital, capital structure, dividend policy and the use of debt and equity financing. It also explores more advanced subjects, including financial options, corporate risk management, mergers and acquisitions, and corporate governance.
This structure allows readers to build their understanding progressively. More complex financial decisions are introduced as extensions of foundational principles, helping students recognise the connections between investment, financing and the overall value of a business.
The Integration of Theory and Practice
The defining characteristic of Principles of Corporate Finance is its ability to connect financial theory with managerial decision-making. The authors do not simply explain how to calculate the value of an investment or determine a company's cost of capital; they explore why these calculations matter and how their results should inform decisions.
For example, the discussion of capital budgeting illustrates how managers can compare competing investment opportunities and determine whether expected future cash flows justify the initial expenditure. The treatment of risk and return demonstrates why investors require compensation for bearing certain risks and how this affects the returns demanded by providers of capital.
Similarly, the analysis of capital structure examines the trade-offs involved in financing a company with debt rather than equity. Borrowing can provide tax advantages and reduce the amount of equity capital required, but excessive indebtedness can increase financial distress and restrict managerial flexibility. By exploring these competing considerations, the authors show why financing decisions cannot be reduced to a universal formula.
This balance between theoretical explanation and practical application makes the book especially valuable. Readers develop not only technical competence but also a framework for evaluating financial choices in situations where information is incomplete and different objectives must be balanced.
Net Present Value and Value Creation
Among the book’s most important contributions is its emphasis on value creation as a guiding principle of corporate financial management.
The authors give particular attention to net present value, which measures the difference between the present value of a project's expected cash inflows and the initial investment, taking account of the appropriate discount rate. A positive NPV indicates that a project is expected to create value under the assumptions used in the analysis.
This approach provides a coherent basis for investment decisions and helps explain why the timing, magnitude and risk of cash flows matter. It also encourages students to distinguish between accounting measures of performance and the economic value generated by a business.
The broader significance of this framework is that it connects investment policy with financing decisions and corporate strategy. A company creates value not simply by expanding its operations or reporting higher profits, but by undertaking investments whose expected benefits justify their costs and risks.
By returning to this principle throughout the text, the authors give readers a consistent analytical foundation for understanding corporate finance.
August 8, 2017
A great introduction to finance. It is very comprehensive, and I suppose a bit challenging to get through for those with no finance background, but it is well worth the effort. As strange as it sounds, it makes the subject of finance quite engaging.
February 17, 2010
Finance textbook for Finance 1, 2 and 3. Great book on Finance
December 8, 2020
Explains everything from first principles, which I really like. Only complaint is that (like most textbooks) it could be made much more concise. But you could definitely get a lot of value by thoughtfully skimming it. Effectively bridged economic theory and practical issues in the world of finance.
January 20, 2026
On one end of the spectrum, the theoretical points coupled with practical insights are truly engaging, particularly as the work is rife with rich references. Nuanced takes further solidify its greatness; and while the loose math is a weak point, it isn't a math textbook, after all. Yet, on the other end of the spectrum, insomniacs would likely find this book a perfect cure.
cerpennya bagus, perbanyak lagi yh cerpen serupa.
cerpennya bagus, perbanyak lagi yh cerpen serupa.
December 25, 2021
Coming into this with no finance background, it's great for learning how corporations are run. I skimmed most of the math sections but all the other units were interesting. I came out with several new perspectives on business and on personal finance. Specifically the usefulness of debt and the correlation of risk vs reward.
July 29, 2009
I learned that finance is not a good topic to discuss from 1-4 on Sat. in the summer.
Read
November 2, 2014not yet read
January 1, 2018
Decent book - took some time to get used to the style but the content is there.
January 25, 2018
Сложно. Зато классика.
April 21, 2019
A gateway book for me at this time of my education while doing an internship in Los Angeles with Merrill Lynch -- 20-25 pages per day until I finished it. Changed my future professional life.
March 31, 2022
I'm currently working on my MBA. I graduated with a 4.0 and a 3.79 for my two undergraduate degrees; I work hard for my grades. In all my currently nine years of higher education I've never come across a more poorly written textbook. There is a lot of math involved, but formulas are rarely clearly given, and algebraic rearrangements of the formulas are interspersed without comment or warning. Examples are wordy and difficult to follow. The index misses many important concepts and the glossary refuses to include any sort of formula to assist with calculations.
McGraw Hill also has online assignments that correlate with the text. Or they are supposed to. The questions jump around from chapter to chapter (60% of questions from chapter 1's assignment can't be solved without having read chapter 2, for example). The questions that do correlate only do so tenuously; the book teaches you that 1 + 1 = 2, but the assignment questions ask 3x * (28 ^ 10 / 1 - r).
The only good thing I can say for the text is that it is written very unpretentiously. When describing concepts, it generally succeeds. When demonstrating concepts, it fails utterly.
McGraw Hill also has online assignments that correlate with the text. Or they are supposed to. The questions jump around from chapter to chapter (60% of questions from chapter 1's assignment can't be solved without having read chapter 2, for example). The questions that do correlate only do so tenuously; the book teaches you that 1 + 1 = 2, but the assignment questions ask 3x * (28 ^ 10 / 1 - r).
The only good thing I can say for the text is that it is written very unpretentiously. When describing concepts, it generally succeeds. When demonstrating concepts, it fails utterly.
April 16, 2021
Cash is King!! The nemesis of my youth. I have just the much torn version in my libary as a memento. But really wish I had made literature my profession instead of finance. But then again, there are pieces of classic literature that are as boring if not more, as quantative finance. Ahh the search for the ultimate elusive objective reality!! Numbers are neat, but but they do reduce you to a homogenous automaton. Dont they?!
December 12, 2025
This book was assigned reading for my corporate finance course. At first I was diligent and read it week by week, but that good habit faded rather quickly. It didn’t help my learning all that much, though the language itself is clear and generally easy to follow. Some of the examples, however, are almost laughably oversimplified in my opinion.
August 2, 2021
Realistically the only book that covers most if not all topics regarding valuing companies, businesses, and fundamental economic principles. And honestly, it's the only book that needs to be read if you're interested in learning about finance in general.
September 29, 2025
my favorite finance book. taught me core fundamentals I know about finance, and had fun examples in it. It's very well written, I read this without a college degree and understood every bit of it. encouraged me to take a bachelors in math
August 13, 2019
worth reading, more-less mainly about net present value of money
December 3, 2019
surprisingly interesting, full of explanations, examples and practice questions. Perfect for understanding how corporate money works.
June 8, 2020
A must have book for all the entrants.
August 27, 2020
En algunas ocasiones es bueno cambiar el enfoque, parar por un momento, y educarse financieramente. Excelente libro, muy teorico y con muchos ejercicios. Elemental para los que recien comenzamos 😍
October 22, 2020
Very clear, good structure and flow. Introduces difficult concepts well and doesn't overcomplicate.
March 9, 2024
Outstanding textbook.
Want to Read
May 6, 2025Recommended for info on M&A
November 6, 2025
Chapter 4 & Chapter 18
January 18, 2026
Much more enjoyable than the economics book and more understandable🥲
March 3, 2021
La polla, un poco difícil de entender pero completo, leer antes economía, estadística y un poco de matemática
July 27, 2013
Good, applicable information that is approachable and applicable to anything you are working on regarding corporate finance. It is a textbook, so it is quite long and a bit dry, but the information in it is well researched and valuable.
October 12, 2008
Worst finance textbook ever.
Read
January 24, 2010I am giving this one a re-read. It is a classic in the finance world.
Displaying 1 - 30 of 42 reviews