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I first came across the term "corporate finance" as a trainee banker in New York in the early 1970s. When I had a spare moment and some spare cash, I used to visit the bookshop at Columbia University and fill up my bag and my brain with small, attractive volumes full of formulae, which made it all seem so scientific.

Before that, in my university days, corporate finance was taught as an incidental part of microeconomics.

Jean Tirole's impeccably systematised volume shows how far we have travelled in 35 years. The style and the content is a successful mixture of European Cartesian approach and American empiricism. This is not surprising in view of the author's connection with both the Ecole Nationale des Ponts et Chaussees and the Massachusetts Institute of Technology, as well as with the University of Toulouse.

The concepts are well laid out and are accompanied by an excellent chapter-by-chapter bibliography. Work-in-progress exercises are provided together with answers at the back of the volume. A substantial part of the text is dedicated to issues that can be characterised as related to corporate governance and/or the agency conflict, in both a narrow and a broad sense.

In the author's upfront admission, "the book either does not cover or provides insufficient coverage of" taxes, bubbles and behavioural finance.

I think this is a pity. The taxman is one of the most important stakeholders in most companies and, while acknowledging the difficulty in fitting into theory the behaviour of a multitude of governments, this is not an impossibility.

Furthermore, bubble mentality has conditioned the mental set of investors, boards and executives alike at the turn of the millennium. Bubbles are not exceptional: in a localised way in terms of geography or industry, they are recurrent phenomena, worthy of theoretical analysis in a book of this relevance.

The non-inclusion of behavioural finance is not something that I particularly miss. There is plenty of literature on the subject that is easily accessible. However, this creates an asymmetry in the text, in so far as the behaviour of all other agents is recurrently examined by Tirole, as evidenced by the richness of words charged with psychological content in the useful index.

The book is clearly meant for the student of corporate finance, but it would also be a useful refresher for corporate finance practitioners, in particular those coming from a legal background and wishing to enrol on an MBA programme. For practitioners, the terminology may be at times confusing, as it reflects an academic approach, but it will not take long to figure out the key to everyday terms used in investment banking.

It would be churlish to attempt minor criticism of a volume that has been so well researched and carefully laid out. However, I had to smile at the incorruptible political correctness that qualified every entrepreneur in the book as a "she". That is not yet reality, and it is to be hoped that the future will see a good gender balance between entrepreneurs, not a reverse imbalance.

Tirole's book will have a prominent place in my library, and I am sure that I shall have plenty of occasions to refer to its authority in the future.

It fully deserves a "buy" rating.

Rudi Bogni, a former investment banker, is a corporate director and foundations trustee.