Unformatted text preview: ster or MBA level. The intension is to supplement renowned corporate
finance textbooks such as Brealey, Myers and Allen's "Corporate Finance", Damodaran's "Corporate
Finance - Theory and Practice", and Ross, Westerfield and Jordan's "Corporate Finance Fundamentals".
The compendium is designed such that it follows the structure of a typical corporate finance course.
Throughout the compendium theory is supplemented with examples and illustrations. Download free ebooks at bookboon.com
8 Corporate Finance The objective of the ﬁrm 2. The objective of the firm
Corporate Finance is about decisions made by corporations. Not all businesses are organized as
corporations. Corporations have three distinct characteristics:
1. Corporations are legal entities, i.e. legally distinct from it owners and pay their own taxes
2. Corporations have limited liability, which means that shareholders can only loose their initial
investment in case of bankruptcy
3. Corporations have separated ownership and control as owners are rarely managing the firm
The objective of the firm is to maximize shareholder value...
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