Abstract
A few years after the publication of their seminal paper, Michael Jensen combined with the great mind Eugene Fama to further explore the hidden costs of the separation of ownership and management. In their paper “Separation of Ownership and Control,” Fama and Jensen further specified the nature of the decision process. They described four different steps in the decision process:
-
1.
The solicitation and ranking of various corporate projects.
-
2.
The selection of the projects that offer a return above the firm’s weighted average cost of capital.
-
3.
The implementation of the projects selected; and
-
4.
The monitoring of the incentives and their results on each project.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Author information
Authors and Affiliations
Copyright information
© 2015 Colin Read
About this chapter
Cite this chapter
Read, C. (2015). Applications and Extensions. In: The Corporate Financiers. Great Minds in Finance. Palgrave Macmillan, London. https://doi.org/10.1057/9781137341280_34
Download citation
DOI: https://doi.org/10.1057/9781137341280_34
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-46505-7
Online ISBN: 978-1-137-34128-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)