Corporate Finance, Global Edition

Jonathan Berk is the A. P. Giannini Professor of Finance at the Graduate School of Business, Stanford University and is a Research Associate at the National Bureau of Economic Research. Before coming to Stanford, he was the Sylvan Coleman Professor of Finance at the Haas School of Business at the University of California, Berkeley. Prior to earning his PhD, he worked as an Associate at Goldman Sachs (where his education in finance really began). Professor Berk's research interests in finance include corporate valuation, capital structure, mutual funds, asset pricing, experimental economics, and labor economics. His work has won a number of research awards including the Stephen A. Ross Prize in Financial Economics, TIAA-CREF Paul A. Samuelson Award, the Smith Breeden Prize, Best Paper of the Year in The Review of Financial Studies, and the FAME Research Prize. His paper, “A Critique of Size-Related Anomalies,” was selected as one of the 2 best papers ever published in The Review of Financial Studies. In recognition of his influence on the practice of finance he has received the Bernstein-Fabozzi/Jacobs Levy Award, the Graham and Dodd Award of Excellence, and the Roger F. Murray Prize. He served 2 terms as an Associate Editor of the Journal of Finance, and a term as a director of the American Finance Association, the Western Finance Association, and academic director of the Financial Management Association. He is a Fellow of the Financial Management Association and a member of the advisory board of the Journal of Portfolio Management. Born in Johannesburg, South Africa, Professor Berk has 2 daughters, and is an avid skier and biker. Peter DeMarzo is the John G. McDonald Professor of Finance at the Graduate School of Business, Stanford University. He is the former President of the American Finance Association and a Research Associate at the National Bureau of Economic Research. He teaches MBA and PhD courses in Corporate Finance and Financial Modeling. Professor DeMarzo has also taught at the Haas School of Business and the Kellogg Graduate School of Management. He is a Fellow of the Econometric Society and former National Fellow at the Hoover Institution. Professor DeMarzo received the Sloan Teaching Excellence Award at Stanford and the Earl F. Cheit Outstanding Teaching Award at U.C. Berkeley. Professor DeMarzo has served as an Associate Editor for The Review of Financial Studies, Financial Management, and the B.E. Journals in Economic Analysis and Policy, as well as Vice President and director of the American Finance Association and President of the Western Finance Association. Professor DeMarzo's research is in the area of corporate finance, asset securitization, and contracting, as well as market structure and regulation. His recent work has examined issues of the optimal design of contracts and securities, leverage dynamics and the role of bank capital regulation, and the influence of information asymmetries on stock prices and corporate investment. He has received numerous awards including the Western Finance Association Corporate Finance Best Paper Award, the Charles River Associates Best-Paper Award, the Barclays Global Investors/Michael Brennan Best Paper of the Year Award from The Review of Financial Studies, and the Brattle Prize for the best corporate finance paper from the Journal of Finance. Professor DeMarzo was born in Whitestone, New York, and is married with 3 boys. He and his family enjoy hiking, biking, and skiing.

Brief Contents PART 1: Introduction

The Corporation and Financial Markets
Introduction to Financial Statement Analysis
Financial Decision Making and the Law of One Price

PART 2: Time, Money, and Interest Rates

The Time Value of Money
Interest Rates
Valuing Bonds

PART 3: Valuing Projects and Firms

Investment Decision Rules
Fundamentals of Capital Budgeting
Valuing Stocks

PART 4: Risk and Return

Capital Markets and the Pricing of Risk
Optimal Portfolio Choice and the Capital Asset Pricing Model
Estimating the Cost of Capital
Investor Behavior and Capital Market Efficiency

PART 5: Capital Structure

Capital Structure in a Perfect Market
Debt and Taxes
Financial Distress, Managerial Incentives, and Information
Payout Policy

PART 6: Advanced Valuation

Capital Budgeting and Valuation with Leverage
Valuation and Financial Modeling: A Case Study

PART 7: Options

Financial Options
Option Valuation
Real Options

PART 8: Long-Term Financing

Raising Equity Capital
Debt Financing
Leasing

PART 9: Short-Term Financing

Working Capital Management
Short-Term Financial Planning

PART 10: Special Topics

Mergers and Acquisitions
Corporate Governance
Risk Management
International Corporate Finance