Looks like a great book on this important subject.Corporate Finance - Jean Tirole

This book is available from the Wilmott Bookshop">The Theory of Corporate Finance

i think great is too much praise - and too theoretical for me to appreciate much of it

I have it and read parts of it. Some of it is interesting, but I doubt any of it is of practical value

QuoteOriginally posted by: gardener3I have it and read parts of it. Some of it is interesting, but I doubt any of it is of practical valueIt feels extremely theoretical.This is the kind of book that makes you wonder if certain finance academics got into this field as an excuse to do math.Fisher Black's motto rings truer with every passing day: "Hire and pay professors for their teaching, not for their research".Of course, very unlikely to happen. The establishment would fight reform tooth and nail.One of the most value-adding aspects of working on a trading floor is to realize how faaaar from reality most finance academics are.

A lot of algorithmic trading is based on empirical findings in corporate finance. And those have in turn been motivated by theoretical models (and vice versa).

Noe the title of the book "THEORY of Corporate Finance". Much of the popular theories provide insights on how we should think about things. For example, Miller and Modigliani through their irrelevance propositions taught us what should matter in capital structure when they said that capital structure didn't matter.Models are abstractions of reality and are not meant to be exact forecasting methodologies. If we can build a model that exactly tracks the movement of, say, stocks, then we wouldn't need traders and analysts. No one can make money off anything because we would be certain of what the next price would be. The problem with SOME practitioners is that they just tweak models in order for them to arrive at some workable and practical solution. However, some don't understand why the models they use work and how their "tweaks" make the assumptions of the model invalid. These are often dismissed withtements like "we don't get that much difference in our answers" or other similar statements. In short, inference from a solution that was generated by violating certain model assumptions should not be relied on, but in practice it doesn't seem to hold. A concrete example is the use of econometric methodology to analyze stock price movements, almost all known data problems are present but most still use the simplicity of OLS regressions in presenting results because it is much easier for their audience to accept the results.

This book is available from the Wilmott BookshopThe Theory of Corporate Finance