The lessons of Michael C. Jensen

René M. Stulz

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

Abstract: This paper assesses the contributions of Michael C. Jensen to financial economics and to American business. His work on agency theory is the cornerstone of modern corporate finance. He influenced how American business operates by helping make the internal and external governance of firms more efficient. He changed how knowledge in financial economics is diffused both through the founding of the Journal of Financial Economics and of the Social Science Research Network. I question the claim made by some that he recanted his ideas in the 2000s.

Keywords: Agency costs; Managerial ownership; Free cash flow; Governance; Jensen's alpha (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:s0304405x25001266

DOI: 10.1016/j.jfineco.2025.104118

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