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The Corporate Financiers

Williams, Modigliani, Miller, Coase, Williamson, Alchian, Demsetz, Jensen and Meckling

  • Colin Read

Part of the Great Minds in Finance book series (GMF)

Table of contents

  1. Front Matter
    Pages i-xiii
  2. Introduction

    1. Colin Read
      Pages 1-6
  3. From Art to Science

    1. Front Matter
      Pages 7-7
    2. Colin Read
      Pages 9-12
    3. Colin Read
      Pages 13-23
    4. Colin Read
      Pages 24-30
    5. Colin Read
      Pages 31-36
    6. Colin Read
      Pages 37-42
  4. Is a Corporation’s Capital Structure Irrelevant?

    1. Front Matter
      Pages 43-43
    2. Colin Read
      Pages 45-52
    3. Colin Read
      Pages 53-60
    4. Colin Read
      Pages 61-63
    5. Colin Read
      Pages 64-70
    6. Colin Read
      Pages 71-72
    7. Colin Read
      Pages 73-74
    8. Colin Read
      Pages 75-77
    9. Colin Read
      Pages 78-80
  5. Transactions Costs and the Value of a Firm

    1. Front Matter
      Pages 81-81
    2. Colin Read
      Pages 85-91
    3. Colin Read
      Pages 92-98
    4. Colin Read
      Pages 99-103
    5. Colin Read
      Pages 115-122
    6. Colin Read
      Pages 123-126
    7. Colin Read
      Pages 127-129
    8. Colin Read
      Pages 130-134
  6. Alchian and Demsetz

    1. Front Matter
      Pages 135-135
    2. Colin Read
      Pages 137-141
    3. Colin Read
      Pages 142-147
    4. Colin Read
      Pages 148-150
    5. Colin Read
      Pages 151-156
    6. Colin Read
      Pages 157-159
    7. Colin Read
      Pages 160-164
    8. Colin Read
      Pages 165-170
  7. Jensen and Meckling

    1. Front Matter
      Pages 171-171
    2. Colin Read
      Pages 173-180
    3. Colin Read
      Pages 189-193
    4. Colin Read
      Pages 194-199
    5. Colin Read
      Pages 200-203
    6. Colin Read
      Pages 204-208
  8. What We Have Learned

    1. Front Matter
      Pages 209-209
    2. Colin Read
      Pages 211-214
    3. Colin Read
      Pages 215-217
  9. Back Matter
    Pages 218-230

About this book

Introduction

The Corporate Financiers is the fifth book in a series of discussions about the great minds in the history and theory of finance. While the series addresses the contributions of scholars in our understanding of modern finance, this volume presents the ways in which a corporation creates value.

More than two centuries ago, Adam Smith explained the concept of division of labor and the efficiencies of specialization as the mechanism in which a firm creates value. However, corporations now find themselves outsourcing some processes to other firms as an alternative way to create value. There must be other economic forces at work than simply the internal efficiencies of a firm. We begin by describing the work of a rather obscure scholar named John Burr Williams who demonstrated in 1938 how the earnings of a firm are capitalized into corporate value through its stock price. We then delve into the inner workings of the modern corporation by describing the contributions of Nobel Memorial Prize winners Ronald Coase and Oliver Williamson. More than any others, these scholars created a renewed appreciation for our understanding of the institutional detail of the modern corporation in reducing costs and increasing efficiency.

While Coase and Williamson provided meaningful descriptions of the advantage of a corporation, they did not offer prescriptions for the avenues the corporation can create more value in an era when new technologies make outsourcing and telecommuting increasingly possible. Michael Jensen and William Meckling describe in greater detail the nature of the implicit contracts a corporation employs, and recommend remedies to various problems that arise when the goals of the corporation are not aligned with the incentives of its agents. We also describe the further nuances to these relationships as offered by Armen Alchian and Harold Demsetz. We treat the lives of these extraordinary individuals who looked at a very familiar problem in a sufficiently novel light to change the way all look at corporations ever since. That is the test of genius.

Keywords

capital finance science and technology success

Authors and affiliations

  • Colin Read
    • 1
  1. 1.SUNY CollegePlattsburghUSA

Bibliographic information