Jensen Corporate Objective Function

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Journal of

APPLIED CORPORATE FINANCE
A MO RG A N S TA N L E Y P U B L I C AT I O N

In This Issue: Honoring Michael Jensen
Baylor University Roundtable on the Corporate Mission, CEO Pay, and improving the Dialogue with investors

8

Panelists: Michael Jensen, Harvard Business School;
Ron Naples, Quaker Chemical Corporation; Trevor Harris,
Columbia University; and Don Chew, Morgan Stanley.
Moderated by John Martin, Baylor University.

Value Maximization, Stakeholder theory, and the
Corporate Objective Function

32

Michael Jensen, Harvard Business School

the Modern industrial Revolution, Exit, and the Failure of internal Control Systems

43

Michael Jensen, Harvard Business School

Just Say No to Wall Street: Putting a Stop to the Earnings Game

59

Joseph Fuller, Monitor Group, and Michael Jensen,
Harvard Business School

CEO incentives—it’s Not How Much You Pay, But How

64

Michael Jensen, Harvard Business School, and
Kevin Murphy, University of Southern California

Active investors, LBOs, and the Privatization of Bankruptcy

77

Michael Jensen, Harvard Business School

Venture Capital in Canada: Lessons for Building (or Restoring) National Wealth

86

Reuven Brenner, McGill University, and
Gabrielle A. Brenner, HEC Montreal

How to tie Equity Compensation to Long-term Results

99

Executive Compensation: An Overview of Research on Corporate Practices and Proposed Reforms

107

Promotion incentives and Corporate Performance: is there a Bright Side to “Overpaying” the CEO?

119

Lucian Bebchuk and Jesse Fried, Harvard Law School
Michael Faulkender, Dalida Kadyrzhanova, N. Prabhala, and Lemma Senbet, University of Maryland
Jayant Kale, Georgia State University, Ebru Reis,
Bentley University, and Anand Venkateswaran,
Northeastern University

Are incentives the Bricks or the Building?

129

Ron Schmidt, University of Rochester