Richard A. Brealey, Stewart C. Myers, and Franklin Allen have long been revered not only for their contributions to finance theory but also for their textbook Principles of Corporate Finance. Known collectively as Brealey, Myers, and Allen, this team has written the most popular corporate finance textbook used in finance classrooms globally. Since its first edition in 1981, Principles of Corporate Finance has set the standard for teaching the core concepts of corporate finance, providing professors, finance tutors, and students with theoretical and practical tools in corporate finance.
GraduateTutor.com offers one-on-one private finance tutoring for this highly respected textbook, Principles of Corporate Finance, by Brealey, Myers, and Allen, ensuring students grasp the essential topics covered, including valuation, capital budgeting, and financial strategy.
Brealey, Myers, and Allen have added Professor Alex Edmans to the 14th edition of Principles of Corporate Finance to add content on responsible business, corporate governance, and behavioral finance. Brealey, Myers, and Marcus have written a sister textbook, Fundamentals of Corporate Finance. The Fundamentals of Corporate Finance was first published in 1995 and has had numerous editions since. We cover the difference between these two corporate finance textbooks here.
McGraw-Hill publishes the Brealey, Myers, and Allen team’s textbooks. (official websites: Principles of Corporate Finance and Fundamentals of Corporate Finance textbooks). Brealey, Myers, and Allen’s finance textbooks are geared toward graduate and undergraduate finance and business program students. Our graduate tutors provide personalized online and in-person support, helping students tackle the Principles of Corporate Finance textbook’s foundational and complex concepts. This page highlights several areas relevant to tutoring for Principles of Corporate Finance:
- Corporate Finance Textbooks by The Brealey, Myers, and Allen Team
- Why We Offer Tutoring for Principles of Corporate Finance
- Teaching Plan / Structure of Principles of Corporate Finance textbook by Richard A. Brealey, Stewart C. Myers, and Franklin Allen
- Difference between the textbooks Principles of Corporate Finance and Fundamentals of Corporate Finance
- Different Editions of “Principles of Corporate Finance” by Richard A. Brealey et al. and the updates
- Different Editions of “Fundamentals of Corporate Finance” by Richard A. Brealey et al. and the updates
- Principles of Corporate Finance: Author’s Profile
- Tutoring for Principles of Corporate Finance and Fundamentals of Corporate Finance
Corporate Finance Textbooks by The Brealey, Myers, and Allen Team
The Brealey, Myers, and Allen team have authored two textbooks together: 1) The Principles of Corporate Finance and 2) Fundamentals of Corporate Finance textbooks. While both target business school students, these textbooks have significant differences in approach, which we will address in this section.
Why We Offer Tutoring for Principles of Corporate Finance
Our finance tutors are drawn to tutor the textbook “Principles of Corporate Finance” by Brealey, Myers, and Allen for several reasons:
Emphasis on Valuation: Brealey, Myers, and Allen highlight valuation as a central concept, with detailed discussions on net present value and other valuation techniques. Our corporate finance tutors also drive valuation as the essence of corporate finance. (DCF valuation poster here) and support business school students in mastering valuation concepts.
Excellent Selection of Practice Questions: As finance tutors, we not only teach corporate finance theory but also want to ensure that students understand and can apply this theory in practice. Here, practice questions are important. The Brealey, Myers, and Allen textbooks are a great source of questions that test the concepts covered in each chapter.
Comprehensive Approach to Risk: The textbook’s coverage of risk and return offers students a nuanced understanding of the relationship between risk and expected returns. Our corporate finance tutors help students apply these principles in practical contexts, such as portfolio management.
Clear Explanations of Capital Structure: The book emphasizes capital structure theory, debt versus equity financing, and the implications of these choices. Tutors assist students in understanding the impact of capital structure decisions on a company’s value and help in setting parameters for an optimal capital structure.
Advanced Topics in Derivatives and Options: Brealey, Myers, and Allen introduce advanced corporate finance topics such as options and real options. These topics offer valuable insights into many different perspectives in corporate finance applications. Our finance tutors provide additional finance tutoring in these challenging areas.
Readability and Practical Application: The Brealey, Myers, and Allen textbooks make finance concepts an easy (easier) read. These textbooks are accessible and relevant, presenting theory with real-world examples. Our tutors build on this approach, guiding students to apply theoretical knowledge to finance problems.
Wide Application: Brealey, Myers, Allen and Edman’s textbook can be used as a resource not only for student but all corporate finance professionals too.
Teaching Plan / Structure of Principles of Corporate Finance textbook by Richard A. Brealey, Stewart C. Myers, and Franklin Allen
The Principles of Corporate Finance and Fundamentals of Corporate Finance textbooks by Richard A. Brealey, Stewart C. Myers, and Franklin Allen are beautifully structured. Topics lead from one to another easily and build on the concepts covered earlier.
Part One of Principles of Corporate Finance Textbook: Value
Part one of Brealey, Myers, and Allen’s Textbook introduces the fundamentals of corporate finance, starting with an overview of key concepts in Chapter 1. Chapters 2 through 4 cover essential valuation techniques, including calculating present values and valuing bonds and stocks. Chapters 5 and 6 delve into investment criteria, emphasizing net present value (NPV) as a critical decision-making tool and demonstrating how to make investment decisions using the NPV rule.
Part Two of the Brealey, Myers, and Allen Textbook: Risk
Part two of the Principles of Corporate Finance explores risk and its role in finance. Chapter 7 introduces concepts of risk, diversification, and portfolio selection. Chapter 8 explains the Capital Asset Pricing Model (CAPM), a key framework for understanding the relationship between risk and return. Chapter 9 discusses risk in relation to the cost of capital, providing insights into how risk influences financing decisions and expected returns.
Part Three: Best Practices in Capital Budgeting
Part three of Brealey, Myers, and Allen’s textbook offers a practical approach to evaluating investment projects. Chapter 10 focuses on project analysis, including sensitivity analysis and scenario planning. Chapter 11 covers methods to ensure that projects truly have positive NPVs.
Part Four of the Brealey, Myers, and Allen Textbook: Financing Decisions and Market Efficiency
Part four of the Principles of Corporate Finance explores market efficiency. Chapter 12 discusses efficient markets and behavioral finance. Chapter 13 provides an overview of corporate financing sources, and Chapter 14 explains the processes through which corporations issue securities and raise funding.
Part Five of the Principles of Corporate Finance Textbook: Payout Policy and Capital Structure
Part five of Brealey, Myers, and Allen’s textbook focuses on decisions regarding payouts and capital structure. Chapter 15 explores payout policies, including dividends and share repurchases. Chapters 16 and 17 examine the importance of debt policy and how much debt is optimal for a corporation. Chapter 18 connects financing choices and valuation.
Part Six of the Brealey, Myers, and Allen Textbook: Corporate Objectives and Governance
Part six of the Principles of Corporate Finance explores governance. Chapters 19 and 20 discuss corporate governance and objectives. Chapter 19 examines agency problems and corporate governance mechanisms to address conflicts between managers and shareholders. Chapter 20 introduces the concepts of stakeholder capitalism and corporate social responsibility.
Part Seven of the Principles of Corporate Finance Textbook: Options
Part seven of Brealey, Myers, and Allen’s textbook focuses on options, beginning with the basics in Chapter 21. Chapter 22 covers the valuation of options, including pricing models like Black-Scholes. Chapter 23 introduces real options. It explains that companies can use option-like flexibility in decision-making to manage uncertainty and enhance project value.
Part Eight of the Brealey, Myers, and Allen Textbook: Debt Financing
Part eight of the Principles of Corporate Finance explores capital structure decisions. Debt financing is examined in depth, beginning with credit risk and the valuation of corporate debt in Chapter 24. Chapter 25 discusses the various types of debt instruments available to companies, while Chapter 26 introduces leasing as an alternative financing option, exploring its advantages and limitations.
Part Nine of the Principles of Corporate Finance Textbook: Risk Management
Part nine of Brealey, Myers, and Allen’s textbook, which has Chapters 27 and 28, covers strategies for managing risk. Chapter 27 discusses domestic risk management techniques, including insurance, hedging, and derivatives. Chapter 28 expands the discussion to international financial management, addressing the unique risks and strategies involved in global operations.
Part Ten: Financial Planning and Working Capital Management
Part ten of the Principles of Corporate Finance explores deals with working capital management. Chapters 29 through 31 focus on financial planning and working capital management. Chapter 29 provides tools for financial analysis, while Chapter 30 explains the importance of long-term financial planning. Chapter 31 covers working capital management, emphasizing liquidity, inventory management, and efficient cash flow management for operational success.
Part Eleven of the Brealey, Myers, Allen, and Edwards Textbook: Mergers, Corporate Control, and Governance
Part eleven of Brealey, Myers, and Allen’s textbook explores mergers and corporate restructuring. Chapter 32 discusses mergers, their motives, and regulatory considerations. Chapter 33 explores corporate restructuring, including spin-offs, divestitures, and other strategies companies use to realign assets and maximize value.
Part Twelve of the Principles of Corporate Finance Textbook: Conclusion
The final chapter of Principles of Corporate Finance explores the major concepts covered throughout the textbook, addressing what we know – and still don’t know – about finance. This chapter reflects on the evolution of financial theories and highlights areas for ongoing research and debate in corporate finance.
These twelve sections of Brealey, Myers, and Allen’s textbook provide a good view of corporate finance, covering fundamental principles, valuation, risk management, capital structure, governance, and more. The Principles of Corporate Finance blend corporate finance theory, practical applications, and real-world examples suitable for both undergraduate and graduate students.
Difference Between the Textbooks Principles of Corporate Finance and Fundamentals of Corporate Finance
The textbooks Principles of Corporate Finance and Fundamentals of Corporate Finance, both authored by Richard A. Brealey, Stewart C. Myers, and (later editions) Franklin Allen, are highly regarded in finance education. While they cover many similar topics, there are some key differences in their focus, depth, and intended audience:
Differences in Depth and Scope
Principles of Corporate Finance is a more comprehensive and advanced text, often used in MBA and graduate-level courses. It provides an in-depth treatment of corporate finance concepts, including detailed explorations of capital structure, options, risk management, and advanced valuation techniques. This book covers the theoretical underpinnings of finance in greater detail and includes complex case studies and advanced problem sets.
Fundamentals of Corporate Finance, on the other hand, is typically geared toward undergraduate or introductory finance courses. It covers the essential principles of corporate finance more concisely and focuses on the foundational aspects of finance. This text prioritizes core topics like financial statements, time value of money, basic investment analysis, and straightforward approaches to risk and return.
Differences in Target Audience
Principles of Corporate Finance is designed for students who are either majoring in finance or pursuing a finance specialization. It requires some familiarity with economics and quantitative analysis and aims to equip students with a deep and broad understanding of corporate finance theory and practice.
Fundamentals of Corporate Finance is intended for a broader audience, including students in business programs who may not specialize in finance. The material is accessible to those with minimal background in finance or quantitative methods, making it ideal for introductory-level finance courses.
Differences in Complexity of Topics
Principles of Corporate Finance covers complex topics such as real options, agency theory, capital asset pricing models (CAPM), and derivatives with a high level of rigor. It explores various theoretical perspectives, including behavioral finance, and addresses current finance research and developments.
Fundamentals of Corporate Finance takes a more practical approach, focusing on foundational tools and techniques in corporate finance without delving into the more abstract or niche theoretical discussions. It is more focused on applications and real-world finance examples, which are easier for beginners to grasp.
Differences in Applications and Examples
Both books use examples and real-world cases, but Principles of Corporate Finance tend to include more complex, in-depth case studies relevant to high-level financial analysis and decision-making.
Fundamentals of Corporate Finance simplifies the examples, often focusing on clear, straightforward applications and providing more step-by-step solutions, which are helpful for those new to the subject.
Differences in Authors
Finally, note that both books have different author teams today. Principles of Corporate Finance is written by By Richard Brealey, Stewart Myers, Franklin Allen and Alex Edmans. Whereas Fundamentals of Corporate Finance is written by Richard Brealey, Stewart Myers and Alan Marcus.
In summary, Principles of Corporate Finance is suited for more advanced students, while Fundamentals of Corporate Finance provides an accessible introduction to the key principles and tools in finance, ideal for students at the start of their finance education.
Different Editions of “Principles of Corporate Finance” by Richard Brealey et al. and the updates
“Principles of Corporate Finance” by Richard Brealey, Stewart Myers, and Franklin Allen has undergone several editions since its first publication in 1980. Each edition introduced significant updates to reflect evolving financial theories and practices. Here’s an overview of the editions, their publication years, and notable changes introduced in each:
- 1st edition (1980): The first edition provided foundational concepts in corporate finance, focusing on valuation, risk management, and capital budgeting.
- 2nd edition (1984): The second edition of Principles of Corporate Finance introduced options and derivatives, reflecting the importance of option instruments in financial markets.
- 3rd edition (1988): The third edition of Brealey, Myers, and Allen corporate finance textbook expanded coverage of international finance, acknowledging the increasing globalization of financial markets.
- 4th edition (1991): The fourth edition of Principles of Corporate Finance added financial planning and working capital management chapters.
- 5th edition (1996): The fifth edition of Principles of Corporate Finance added the impact of information technology on financial decision-making and markets.
- 6th edition (1999): The sixth edition of Brealey, Myers, and Allen corporate finance textbook added more content on real options analysis.
- 7th edition (2003): the seventh edition of Principles of Corporate Finance introduced content on corporate governance, addressing issues related to agency problems and mechanisms to align management with shareholder interests.
- 8th edition (2006): The eighth edition of Brealey, Myers, and Allen corporate finance textbook included new material on behavioral finance, exploring how psychological factors influence financial decision-making.
- 9th edition (2008): The ninth edition of Principles of Corporate Finance added comprehensive coverage of the 2007-2008 financial crisis and its implications for corporate finance.
- 10th edition (2011): The tenth edition of Brealey, Myers, and Allen corporate finance textbook enhanced discussions on risk management techniques, including using derivatives and hedging strategies.
- 11th edition (2014): The eleventh edition of Principles of Corporate Finance added more content on international financial management, reflecting changes in global financial markets and practices.
- 12th edition (2017): The twelfth edition of Brealey, Myers, and Allen corporate finance textbook had new sections on sustainability and corporate social responsibility, highlighting their growing importance in financial decision-making.
- 13th edition (2019): The thirteenth edition of Principles of Corporate Finance expanded coverage of fintech innovations, such as blockchain and cryptocurrencies, and their impact on corporate finance.
- 14th edition (2022): The fourteenth edition of Principles of Corporate Finance Added a new co-author, Alex Edmans, and introduced a chapter on stakeholder capitalism and responsible business, behavioral finance, and new views on corporate objectives.
Each edition has built upon its predecessors, incorporating contemporary developments and research to provide readers with a comprehensive understanding of corporate finance.
Different Editions of “Fundamentals of Corporate Finance” by Richard A. Brealey et al. and the updates
“Fundamentals of Corporate Finance” by Richard Brealey, Stewart Myers, and Alan Marcus has undergone multiple editions, with each introducing significant updates to reflect evolving financial theories and practices. Here’s an overview of the editions, their publication years, and notable changes introduced in each:
- 1st edition (1995): The first edition of Fundamentals of Corporate Finance established foundational concepts in corporate finance, focusing on valuation, risk management, and capital budgeting.
- 2nd edition (1999): The second edition of Brealey, Myers, and Marcus’s corporate finance textbook introduced options and derivatives, reflecting the growing importance of these instruments in financial markets.
- 3rd edition (2001): The third edition of Fundamentals of Corporate Finance added international finance content.
- 4th edition (2004): The fourth edition of Brealey, Myers, and Marcus’s textbook introduced new chapters on financial planning and working capital management, emphasizing the importance of short-term financial decisions.
- 5th edition (2007): The fifth edition of Brealey, Myers, and Marcus’s textbook incorporated discussions on the impact of information technology on financial decision-making and markets.
- 6th edition (2009): The sixth edition of Fundamentals of Corporate Finance by Brealey, Myers, and Marcus introduced real options.
- 7th edition (2011): The seventh edition of Brealey, Myers, and Marcus’s textbook introduced content on corporate governance, addressing issues related to agency problems and mechanisms to align management with shareholder interests.
- 8th edition (2012): The eigth edition of Brealey, Myers, and Marcus’s textbook added new material on behavioral finance, exploring how psychological factors influence financial decision-making.
- 9th edition (2014): The nineth edition of the Fundamentals of Corporate Finance textbook added comprehensive coverage of the 2007-2008 financial crisis, analyzing its causes and implications for corporate finance.
- 10th edition (2017): The tenth edition of Brealey, Myers, and Marcus’s textbook added risk management techniques, including the use of derivatives and hedging strategies.
- 11th edition (2022): The eleventh edition of Fundamentals of Corporate Finance added content on international financial management.
Each edition has built upon its predecessors, incorporating contemporary developments and research to provide readers with a comprehensive understanding of corporate finance.
Principles of Corporate Finance: Author’s Profile
Professor Richard Brealey
Professor Richard Brealey is an esteemed finance academic known for his contributions to corporate finance, investment management, international finance, and capital markets in addition to his influential textbooks, Principles of Corporate Finance and Fundamentals of Corporate Finance, which are widely used across the globe, shaping the foundational knowledge of finance students and professionals. Professor Brealey’s research has been published in prominent journals like the Review of Financial Studies and the Journal of Applied Corporate Finance, showcasing his ongoing impact on financial scholarship.
In addition to his role as Emeritus Professor of Finance at London Business School, Brealey serves as a director of the Swiss Helvetia Fund and holds editorial positions, including Associate Editor of the Journal of Applied Corporate Finance and advisory editor of Economic Notes. He is also on the Advisory Board of International Finance. His career has included influential roles beyond academia, such as serving as a special adviser to the Governor of the Bank of England. Brealey has held visiting appointments at esteemed institutions, including the University of California (Berkeley), the University of British Columbia, the University of Hawaii, and the Australian Graduate School of Management, reflecting his broad influence and commitment to advancing finance education worldwide.
Professor Stewart C. Myers
Stewart C. Myers, the Robert C. Merton (1970) Professor of Finance, Emeritus at the MIT Sloan School of Management, is a towering figure in the field of corporate finance. Known for his influential textbook Principles of Corporate Finance, co-authored with Richard Brealey and Franklin Allen, Myers has contributed foundational knowledge that has earned the book a reputation as the “bible” of financial management. A past President of the American Finance Association and a Research Associate at the National Bureau of Economic Research, Myers is also a principal of the Brattle Group, Inc., where he continues to influence finance practice and policy. His research focuses on corporate finance, asset valuation, and the financial aspects of government regulation. Among his pioneering contributions are the tradeoff and pecking order theories of capital structure, as well as the introduction of real options in corporate finance, concepts that have become central to understanding corporate financial strategy.
Myers’s research is extensive and impactful, covering diverse topics such as adjusted present value (APV), rate of return regulation, capital allocation, risk management in banking and insurance, payout policy, and moral hazard in financing decisions. He has authored numerous highly regarded papers, shaping both academic thought and practical approaches to finance. His service as a director for corporations like Entergy and CAT Ltd. and as a manager of the Cambridge Endowment for Research in Finance reflects his commitment to applying finance principles in real-world settings. Currently, Myers’s research is centered on theoretical models of long-term capital investment dynamics, efficient risk capital allocation by banks and financial firms, and real options valuation, exploring aspects like option leverage, tax implications, and effects on capital structure. His work has significant implications for corporate governance, financial firm regulation, and the strategic decision-making processes of mature public corporations.
Professor Richard Allen
Dr. Richard Allen is a seasoned expert in public finance, with extensive experience as a former staff member and Deputy Division Chief of the Fiscal Affairs Department at the International Monetary Fund (IMF). Since April 2021, he has served as a consultant on public finance issues, drawing on his rich background in international fiscal policy. Allen has been a significant contributor to the IMF’s public finance blog since its inception in 2007 and held the role of Co-Editor for a decade. Additionally, he is a Senior Research Associate with the Overseas Development Institute in London, where he continues to influence research and policy in public financial management (PFM) globally.
Before his tenure at the IMF, Allen held senior positions in several prestigious organizations, including the UK Treasury, the Organisation for Economic Co-operation and Development (OECD), the Asian Development Bank, and the World Bank. He also served as a board member of the European Investment Bank, contributing to strategic financial decision-making at the institutional level. Over his career, he has advised the governments of more than 80 countries across Europe, the Middle East, Africa, and Asia on a wide range of public finance topics. His work in PFM is well-recognized through his publications, including The International Handbook of Public Financial Management, co-edited with Palgrave Macmillan in 2015, as well as numerous books and articles on fiscal policy and public finance. His deep knowledge and extensive experience make him a valuable asset to global fiscal governance and reform efforts.
Professor Alan J. Marcus
Professor Alan J. Marcus is a prominent finance professor at Boston College’s Carroll School of Management. Professor Marcus specializes in investments, asset pricing, and derivatives. His research interests include portfolio theory, futures and options markets, and financial markets’ efficiency. Marcus has authored several other finance-related publications and articles in prestigious journals, contributing valuable insights into financial economics and investment management.
Professor Alex Edmans
Professor Alex Edmans is a distinguished finance scholar known for his expertise in purposeful business, sustainable investing, corporate governance, and behavioral finance. Currently a professor of finance, Edmans is also an author, speaker, and advisor with a focus on how businesses can deliver both purpose and profit. His influential book Grow the Pie: How Great Companies Deliver Both Purpose and Profit makes the case for a “pie-growing” approach to business, where companies prioritize creating value for society alongside financial performance. This book was recognized as one of the Financial Times Books of the Year and has been translated into multiple languages, reflecting its global impact on business thought.
In addition to his academic contributions, Edmans frequently engages with policy and practice, writing for prominent publications like the Wall Street Journal and speaking at international forums. He recently joined as a co-author on the 14th edition of Principles of Corporate Finance to enhance the textbook’s content on responsible business, corporate governance, and behavioral finance. His TED talks, including “The Pie-Growing Mindset,” emphasize the importance of critical thinking and the role of business in society. With a reputation for accessible explanations and a focus on both rigorous research and practical applications, Edmans continues to shape contemporary finance and business ethics.
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