Coverage Comparisons
This document is my quick-take on how the major introductory corporate finance text books are similar and different. The document is a few years old, and thus the editions have changed chapters by now. This document only gives a "flavor" for how they differ.
Introductory corporate finance books overlap about 80%. None of the authors have special knowledge. They differ primarily in how they focus the learning experience. Brealey, Ross, and Berk are more similar to one another. Welch is somewhat different. It is less of an 'executive' take and more of a 'tutorial' take on corporate finance. It has more emphasis on the distinction between expected and promised returns, on the role of perfect markets, on benchmark-based (rather than just CAPM-based) pricing, and on pro-forma construction. It has less emphasis on options, leasing, and short-term/working-capital management. Some chapters are separate from the main book (e.g., governance, options, etc.) These are IMHO chapters that tend not to be covered by a first corporate finance course, but specialized follow-on courses, where dedicated textbooks can do a better job.
| # | Title | Brealey | Ross | Berk | Welch |
|---|---|---|---|---|---|
| 1 | Introduction | 1 | 1 | 1,2,3 | 1 |
| 2 | Present Value | 2 | 4 | 4 | 2 |
| 3 | Stocks and Bond Values (Perpet) | 4 | 9 | 4,9 | 3 |
| 4 | Capital Budgeting Main Rules | 5,6 | 5,6 | 7,8 | 4 |
| 5 | Time-Varying Rates of Return and Yield Curve | 3 | 8 | 5,6 | 5 |
| 6 | Uncertainty, Default, Risk | 23 | - | - | 6 |
| 7 | Historical Investment Patterns | 7 | 10 | 10 | 7 |
| 8 | Risk and Reward | 8 | 11 | 11 | 8 |
| 9 | Benchmark Pricing | - | - | - | 9 |
| 10 | CAPM | 8,9 | 11,13 | 11,12 | 10 |
| 11 | Imperfections | - | - | - | 11 |
| 12 | Perfect, Efficient, Classical, Behavioral | 13 | 14 | 13 | 12 |
| 13 | Capital Budgeting | 10,11,12,22,28,29 | 6,7 | 22 | 13 |
| 14 | Financial Statements | 28,29 | 2,3 | 2,19 | 14 |
| 15 | Comparables and Ratios | 28 | ? | 19 | 15 |
| 16 | Claims | 14,15,24 | 15,20 | 23,24 | 16 |
| 17 | Capital Structure (Perfect) | 17 | 16 | 14 | 17 |
| 18 | Capital Structure Taxes | 18,19 | 18 | 15,18 | 18 |
| 19 | Capital Structure (Imperfect) | 18 | 17 | 16 | 19 |
| 20 | Dividends and Repurchases | 16 | 19 | 17 | 20 |
| 21 | Pro Forma | - | - | - | 21 |
| 22 | Options | 20,21 | 22,23,24,25 | 20,21 | A |
| 23 | International | - | 31 | 31 | B |
| 24 | Governance | 33 | - | 29 | C |
| 25 | Ethics | - | - | - | D |
| 26 | Leasing | 25 | 21 | 25 | - |
| 27 | Risk Management | 26,27 | ? | 30 | - |
| 28 | Working Capital Management | 30 | 26,27,28 | 26,27 | - |
| 29 | Mergers | 31,32 | 29 | 28 | E |
| 30 | APT | - | 12 | - | - |
| 31 | Distress | - | 30 | - | - |
Brealey = ed 12. Ross = ed 11. Berk = ed 4. Welch = ed 4.
Suggestions for changes to the coverage comparison are welcome. My understanding is based only on a cursory paging-through of the four books.
| Feature | Brealey | Ross | Berk | Welch | |
|---|---|---|---|---|---|
| Full Instructor Materials | Y | Y | Y | Y | |
| eTextbook | $241 | $250 | $256 (4th) | Free | |
| ...untethered PDF access, instant and universal | N | N | N | Y | |
| Printed Book Cost | $310 (11th)+ | $349 (11e, MSRP) | $290 (4th) | $60 | |
| ...color and hardcover in print | Y | Y | Y | N | |
| Free Course Admin and EQuiz Website | N | N | N | Y | |
| ...instructor-modifiable with changing numbers | N | N | N | Y | |
| ...open-source (future proof) | N | N | N | Y | |
| Pages | 976 (12th) | 1,056 (11e) | 1,168 (4th) | 658 | |
| Amazon Review | 4 stars | 4 stars | 4 stars | 4.5 stars | |
| Sales Representative on Call | Y | Y | Y | N | |
| ...regular text changes to suppress resale | Y | Y | Y | N |
Book pricing is difficult to determine—publishers do not clearly advertise it and there are many similar but not identical versions of peer texts. The Amazon reviews were based typically on about 40 anonymous reviews, and presumably not from individuals familiar with more than one book each. Please bring errors to my attention.