E-Book Overview
The past twenty years have seen great theoretical and empirical advances in the field of corporate finance. Whereas once the subject addressed mainly the financing of corporations--equity, debt, and valuation--today it also embraces crucial issues of governance, liquidity, risk management, relationships between banks and corporations, and the macroeconomic impact of corporations. However, this progress has left in its wake a jumbled array of concepts and models that students are often hard put to make sense of.
Here, one of the world's leading economists offers a lucid, unified, and comprehensive introduction to modern corporate finance theory. Jean Tirole builds his landmark book around a single model, using an incentive or contract theory approach. Filling a major gap in the field, The Theory of Corporate Finance is an indispensable resource for graduate and advanced undergraduate students as well as researchers of corporate finance, industrial organization, political economy, development, and macroeconomics.
Tirole conveys the organizing principles that structure the analysis of today's key management and public policy issues, such as the reform of corporate governance and auditing; the role of private equity, financial markets, and takeovers; the efficient determination of leverage, dividends, liquidity, and risk management; and the design of managerial incentive packages. He weaves empirical studies into the book's theoretical analysis. And he places the corporation in its broader environment, both microeconomic and macroeconomic, and examines the two-way interaction between the corporate environment and institutions.
Setting a new milestone in the field, The Theory of Corporate Finance will be the authoritative text for years to come.
E-Book Content
The Theory of Corporate Finance
The Theory of Corporate Finance
Jean Tirole
Princeton University Press Princeton and Oxford
Copyright © 2006 by Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, 3 Market Place, Woodstock, Oxfordshire OX20 1SY All rights reserved Library of Congress Cataloguing-in-Publication Data Tirole, Jean. The theory of corporate finance / Jean Tirole. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-691-12556-2 (cloth: alk. paper) ISBN-10: 0-691-12556-2 (cloth: alk. paper) 1. Corporations—Finance. 2. Business enterprises—Finance. 3. Corporate governance. I. Title. HG4011.T57 2006 338.4 3 001—dc22
2005052166
British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library This book has been composed in LucidaBright and typeset by T&T Productions Ltd, London Printed on acid-free paper www.pup.princeton.edu
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Printed in the United States of America 1 2 3 4 5 6 7 8 9 10
à Naïs, Margot, et Romain
Contents
Acknowledgements
1
Overview of the Field and Coverage of the Book
1
Approach
6
Prerequisites and Further Reading
7
Some Important Omissions
7
References
I
xi
Introduction
An Economic Overview of Corporate Institutions
10
13
Corporate Governance
15
1.1
Introduction: The Separation of Ownership and Control
15
1.2
Managerial Incentives: An Overview
20
1.3
The Board of Directors
29
1.4
Investor Activism
36
1.5
Takeovers and Leveraged Buyouts
43
1.6
Debt as a Governance Mechanism
51
1.7
International Comparisons of the P