Financial Markets & Corporate Strategy

by Sheridan Titman and Mark Grinblatt

Book Overview

Includes a chapter on the ingredients of valuation: accounting, cash flows, and basic discounting. This book contains examples, vignettes, numbers, statements, and exercises and examples. This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 0072294337
• ISBN13: 9780072294330
• Release Date: October 2001
• Publisher: Irwin/McGraw-Hill
• Length: 880 Pages
• Weight: 3.85 lbs.
• Dimensions: 1.5" x 8.3" x 10.3"

Customer Reviews

A Wonderful Approach to Corporate Finance

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

Good basic overview of finance intersecting corp strategy

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.

An integrated approach to corporate finance and strategy

The most valuable part of this book is in its ability to integrate financial decision making with strategy. This is rare especially for a book this good.Another valuable point is that its approach of balancing theories and practicality. If student finds it a little confusing or non-conclusive on many issues, it is precisely so in reality.A book this good is more than a gift.

Good comprehensive text for corporate finance.

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.

Outstanding!

I took a course from Professor Grinblatt at UCLA that used this text. Professor Grinblatt was an outstanding teacher and the use of this text was very effective. This text achieves the difficult objective of explaining concepts in a digestible manner without sacrificing rigor. It also incorporates the latest thinking in both finacial markets and corporate finance. I highly recommend it for anyone looking for a comprehensive finance reference.