Jensen and Meckling at 50

Patrick Bolton

Journal of Financial Economics, 2025, vol. 172, issue C

Abstract: This article does three things: (1) it offers a slightly modernized treatment of the two well-known agency costs of external financing of Jensen and Meckling; (2) it provides a deeper exploration than they offer of the limited liability corporation, and of optimal control allocations when financial contracts are incomplete; and, (3) it assesses the lasting influence or their ideas, their multiple interpretations, as well as misinterpretations.

Keywords: Agency costs; Capital structure; Limited liability; Corporate governance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:172:y:2025:i:c:s0304405x25001242

DOI: 10.1016/j.jfineco.2025.104116

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