DMCA
The modern industrial revolution, exit, and the failure of internal control systems (1993)
Venue: | JOURNAL OF FINANCE |
Citations: | 971 - 6 self |
Citations
3300 | The Competitive Advantage of Nations - Porter - 1990 |
2309 | Agency Costs of Free Cash Flows, Corporate Finance and Takeovers,” American Economic Review 76
- Jensen
- 1986
(Show Context)
Citation Context ... are becoming more common in well-managed firms.Michael C. Jensen 25 1997 invest in even more money-losing capacity—situations that illustrate vividly what I call the agency costs of free cash flow (=-=Jensen, 1986-=-a). Contracting Problems Explicit and implicit contracts in the organization can become major obstacles to efficient exit. Unionization, restrictive work rules, and lucrative employee compensation and... |
2292 | [1942]) Capitalism, Socialism and Democracy,
- Schumpeter
- 1992
(Show Context)
Citation Context ...away from under them. In other words, the problem that is usually being visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them (=-=Schumpeter, 1976-=-, p. 83). 1 In a rare finance study of exit, DeAngelo and DeAngelo (1991) analyze the retrenchment of the U.S. steel industry in the 1980s. Ghemawat and Nalebuff (1985) have an interesting paper entit... |
764 | Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States - Hirschman - 1970 |
611 |
The Visible Hand: The Managerial Revolution in American Business
- Chandler
- 1977
(Show Context)
Citation Context ... rapid growth in productivity and living standards, the formation of large corporate hierarchies, overcapacity, and, eventually, closure of facilities. (See the excellent discussions of the period by =-=Chandler, 1977-=-, 1990, 1992, Lamoreaux, 1985,Michael C. Jensen 5 1997 and McCraw, 1981, 1992.) Originating in Britain in the late eighteenth century, the First Industrial Revolution—as Chandler (1990, p. 250) label... |
590 | Scale and Scope: The Dynamics of Industrial Capitalism - Chandler - 1990 |
255 | Does Corporate Performance Improve after Merger Success?", - Healy, Palepu, et al. - 1992 |
247 | The structure and governance of venture-capital organizations. - Sahlman - 1990 |
236 | Troubled debt restructurings: An empirical study of private reorganization of firms in default, - Gilson, John, et al. - 1990 |
234 | Management Entrenchment: The case of manager-specific investments. - Schleifer, Vishny - 1989 |
231 | Relative Performance Evaluation for Chief Executive Officers." Industrial and Labor Relations Review (forthcoming, - Gibbons, Murphy - 1990 |
221 | A modest proposal for improved corporate governance - Lipton, Lorsch - 1992 |
219 | The Market for Corporate Control: The Empirical Evidence Since 1980,Journal of Economic Perspectives, - Jarrell, Brickley, et al. - 1988 |
210 | The hidden costs of stock market liquidity. - Bhide - 1993 |
207 | Takeovers: Their Causes and Consequences‟, - Jensen - 1988 |
183 | The effect of management buyouts on operating performance and value, - Kaplan - 1989 |
154 | A Test of the Free Cash Flow Hypothesis: The Case of Bidder Returns‟, - Lang, Stulz, et al. - 1991 |
149 | Capital Disadvantage: America’s Failing Capital Investment System, - Porter - 1992 |
148 | Proxy Contests and the Efficiency of Shareholder Oversight, - Pound - 1988 |
147 | Contagion and competitive intra-industry effects of bankruptcy announcements: An empirical analysis, - Lang, Stulz - 1992 |
141 | The Stock Market's Valuation of R&D Investment During the 1980s." - Hall - 1993 |
122 | The Choice of Organizational Form: The Case of Franchising." - Brickley, Dark - 1987 |
105 | The effects of leveraged buyouts on productivity and related aspects of firm behavior. - Lichtenberg, Siegel - 1990 |
88 | Eclipse of the Public
- Jensen
- 1989
(Show Context)
Citation Context ... of directors. 29 Shleifer and Summers (1988) seem to take the position that all implicit contracts should be enforced rigidly and never be breached.Michael C. Jensen 27 1997 As explained elsewhere (=-=Jensen, 1989-=-a, 1989b, 1991, Roe, 1990, 1991), the capital markets were relatively constrained by law and regulatory practice from about 1940 until their resurrection through hostile tender offers in the 1970s. Pr... |
77 |
Corporate control and the politics of finance,”
- Jensen
- 1991
(Show Context)
Citation Context ...increases beginning in 1973. The Decade of the 80s: Capital Markets Provided an Early Response to the Modern Industrial Revolution The macroeconomic data for the 1980s shows major productivity gains (=-=Jensen, 1991-=-). 1981 was in fact a watershed year: Total factor productivity growth in the manufacturing sector more than doubled after 1981 from 1.4 percent per year in the period 1950 to 1981 to 3.3 percent in t... |
75 |
Overcoming organizational defenses.
- Argyris
- 1990
(Show Context)
Citation Context ...(see Burnham, 1993, and DeAngelo, 1991). Part of the problem is managerial and organizational defensiveness that inhibits learning and prevents managers from changing their model of the business (see =-=Argyris, 1990-=-). Implicit contracts with unions, other employees, suppliers, and communities add to formal union barriers to change by reinforcing organizational defensiveness and inhibiting change long beyond the ... |
70 | Managerial competition, information costs, and corporate governance. - DeAngelo - 1988 |
68 | Capital Choices: Changing the Way America Invests in - Porter - 1992 |
65 | Capital Structure and Firm Response to Poor Performance: An Empirical Analysis - Ofek - 1993 |
60 | Managing the Resource Allocation Process: a Study of' C'orporcrte Planning and Investment, Graduate School of Business Administration, - Bower - 1970 |
55 |
Political and legal restraints on ownership and control of public companies,
- Roe
- 1990
(Show Context)
Citation Context ...nd Summers (1988) seem to take the position that all implicit contracts should be enforced rigidly and never be breached.Michael C. Jensen 27 1997 As explained elsewhere (Jensen, 1989a, 1989b, 1991, =-=Roe, 1990-=-, 1991), the capital markets were relatively constrained by law and regulatory practice from about 1940 until their resurrection through hostile tender offers in the 1970s. Prior to the 1970s capital ... |
54 | Organizational Changes and Value Creation in Leveraged Buyouts,’’ - Baker, Wruck - 1989 |
52 |
The takeover controversy: Analysis and evidence.
- Jensen
- 1988
(Show Context)
Citation Context ... are becoming more common in well-managed firms.Michael C. Jensen 25 1997 invest in even more money-losing capacity—situations that illustrate vividly what I call the agency costs of free cash flow (=-=Jensen, 1986-=-a). Contracting Problems Explicit and implicit contracts in the organization can become major obstacles to efficient exit. Unionization, restrictive work rules, and lucrative employee compensation and... |
49 | Japanese Takeovers: The Global Contest for Corporate Control. - Kester - 1991 |
47 |
The Great Merger Movement in
- Lamoreaux
- 1985
(Show Context)
Citation Context ...y and living standards, the formation of large corporate hierarchies, overcapacity, and, eventually, closure of facilities. (See the excellent discussions of the period by Chandler, 1977, 1990, 1992, =-=Lamoreaux, 1985-=-,Michael C. Jensen 5 1997 and McCraw, 1981, 1992.) Originating in Britain in the late eighteenth century, the First Industrial Revolution—as Chandler (1990, p. 250) labels it—witnessed the applicatio... |
43 | Executive Compensation and Executive Incentive Problems: An Empirical Analysis.” - Lewellen, Loderer, et al. - 1987 |
43 | Corporate Takeovers and Productivity - Lichtenberg - 1992 |
37 | Do Union Wealth Concessions Explain Takeover Premiums?: The Evidence on Contract Wages, - Rosett - 1990 |
33 | Organization Theory and Methodology. The Accounting Review, LVII; - Jensen - 1983 |
31 | Reversions of Excess Pension Assets After Takeovers,” - Pontiff, Shleifer, et al. - 1990 |
30 | Corporate financial policy and corporate control: A study of defensive adjustments in asset and ownership structure. - Dann, DeAngelo - 1988 |
30 | Reinventing the outside director: an agenda for institutional investors - Gilson, Kraakman - 1991 |
29 | C.,"Optimal Sequential Investment When Capital is Not Readily Reversible - Baldwin - 1982 |
27 | Beyond takeovers: Politics comes to corporate control - Pound - 1992 |
26 | Proxy contests and the governance of publicly held corporations, - DeAngelo, DeAngelo - 1989 |
26 | A political theory of American corporate finance. - Roe - 1991 |
24 |
Union Negotiations and Corporate Policy: A Study of Labor Concessions in the Domestic Steel Industry During the 1980s.
- DeAngelo, DeAngelo
- 1992
(Show Context)
Citation Context ...ation and worldwide competition (often from new, more flexible, and non-union organizations), these dominant firms cannot adjust fast enough to maintain their market dominance (see Burnham, 1993, and =-=DeAngelo, 1991-=-). Part of the problem is managerial and organizational defensiveness that inhibits learning and prevents managers from changing their model of the business (see Argyris, 1990). Implicit contracts wit... |
23 | The Evolution of Buyout Pricing and - Kaplan, Stein - 1993 |
22 |
Consequences of leveraged buyouts
- Palepu
- 1990
(Show Context)
Citation Context ...can be emulated in part or in total by virtually any corporation. The two have similar governance structures, and have been successful in resolving the governance problems of both slow 48 See Palepu (=-=Palepu, 1990-=-) for a review of research on LBOs, their governance changes, and their productivity effects. Kaplan and Stein (1993) show similar results in more recent data. 49 See references in footnote 45 above. ... |
21 |
An Introduction to Law and Economics
- Polinsky
- 2003
(Show Context)
Citation Context ...mal breach of contracts, and the bonding against opportunistic behavior that must accompany it, is an important topic that has received considerable attention in the law and economics literature (see =-=Polinsky, 1989-=-) but is deserving of more attention by organization theorists. V. The Role of the Market for Corporate Control The Four Control Forces Operating on the Corporation There are only four control forces ... |
20 | Strategies for declining businesses - Harrigan - 1980 |
19 | Organizational form and the consequences of highly leveraged transactions: Kroger’s recapitalization and Safeway’s LBO’, - Denis - 1994 |
19 | Capital Choices: Changing the Way America - Porter - 1992 |
18 | Specific and general knowledge, and organization structure. - Jensen, Meckling - 1992 |
18 | CEO Incentives—It's Not How Much You Pay, But How‖. - Jensen, Murphy - 2010 |
17 | Subordination of American capital." - Grundfest - 1990 |
14 | The Theory of Capital Structure” The Journal of Finance 41 - Harris, Raviv - 1991 |
14 | The role of majority shareholders in publicly-held corporations. - holderness, sheehan - 1988 |
12 |
The rise of the political model of corporate governance and corporate control
- Pound
- 1993
(Show Context)
Citation Context ... regulatory practice from about 1940 until their resurrection through hostile tender offers in the 1970s. Prior to the 1970s capital market discipline took place primarily through the proxy process. (=-=Pound, 1993-=-, analyzes the history of the political model of corporate control.) The legal/political/regulatory system is far too blunt an instrument to handle the problems of wasteful managerial behavior effecti... |
11 | Schwert - Fama, William - 1977 |
10 | Breach of Trust in Hostile Takeovers. In: Corporate Takeovers: Causes and Consequences - Shleifer, Summers - 1988 |
8 | Monitoring an owner: the case of Turner Broadcasting”, 30 - Holderness, Sheehan - 1991 |
7 | When Markets Quake - Bower - 1986 |
5 | The collapse of first executive corporation junk bonds, adverse publicity, and the ‘run on the bank’ phenomenon - DeAngelo, DeAngelo, et al. - 1994 |
4 |
Going private: Minority freezeouts and shareholder wealth
- DeAngelo, Rice
- 1984
(Show Context)
Citation Context ...y of managerial pay to performance rises, and the companies’ equity usually become nonpublicly traded (although debt is often publicly traded). The evidence of DeAngelo, DeAngelo, and Rice (DeAngelo, =-=DeAngelo et al., 1984-=-), Kaplan (1989b), Smith (1990), and others indicates that premiums to selling-firm shareholders are roughly 40 percent to 50 percent of the prebuyout market value, cash flows increase by 96 percent f... |
3 | Organizational form, leverage, and incentives: a study of risk taking - Esty - 1993 |
3 | Groups that Work - Hackman - 1990 |
2 | Restructuring petrochemicals: A comparative study of business and government strategy to deal with a declining sector of the economy - Bower - 1985 |
2 | Out of the ivory tower - Economist - 1990 |
2 | A Tale of Two Thrifts - Esty |
2 | Managing Maturing Businesses: Restructuring Declining Industries and Revitalizing Troubled Operations - Harrigan - 1988 |
2 | Gordon Cain and the Sterling Group - Jensen, Barry - 1992 |
2 | Management Buyouts: Evidence on Taxes as a Source of Value.” Journal of Finance 44 - Kaplan - 1989 |
2 |
Dinosaurs?” Fortune
- Loomis
- 1993
(Show Context)
Citation Context ...its mainframe business following the revolution in the workstation and personal computer market—ironically enough a revolution that it helped launch with the invention of the RISC technology in 1974 (=-=Loomis, 1993-=-). Like GM, IBM is a high-cost producer in a market with substantial excess capacity. It too began to change its strategy significantly and removed its CEO only after reporting losses of $2.8 billion ... |
2 |
Vve Have Recovered Before
- Price
- 1933
(Show Context)
Citation Context ...f prosperity without any visible warning, without even a cloud the size of a man’s hand visible on the horizon, has the cloud gathered, as it were, from the center first, spreading all over the sky? (=-=Price, 1933-=-, p. 6). On July 4, 1892, the Populist Party platform adopted at the party’s first convention in Omaha reflected similar discontent and conflict: We meet in the midst of a nation brought to the verge ... |
1 | Managing Retreat: Disinvestment Policy”. America Versus - Anderson - 1986 |
1 | How Capital Budgeting Deters Innovation - Baldwin - 1991 |
1 | Lenos Trigeorgis - Baldwin - 1992 |
1 | Anne Beattey Blackman and Edward Wolff - Baumol, Sue - 1989 |
1 | Leverage and Value: The Role of Agency Costs and Taxes. Unpublished Manuscript, The Wharton School - Berger, Ofek - 1993 |
1 | expect this measure provides an unreasonably high estimate of the productivity of R&D and investment expenditures and therefore do not report it - unknown authors - 1994 |
1 |
Tiny Transistors and Gold
- Brandt
- 1993
(Show Context)
Citation Context ...ogical progress in personal computers has itself been stunning. Intel’s Pentium (586) chip, introduced in 1993, has a capacity of 100 MIPS — 100 times the capacity of its 286 chip introduced in 1982 (=-=Brandt, 1993-=-). In addition, the progress of storage, printing, and other related technology has also been rapid (Christensen, 1993).Michael C. Jensen 16 1997 the industry—a force that has wracked IBM as a high-c... |
1 |
Changes and Challenges: The Transformation of the U.S
- Burnham
- 1993
(Show Context)
Citation Context ... over 50 percent from 509,000 to 252,000. 23 From 1985 to 1989 multifactor productivity in the industry increased at an annual rate of 5.3 percent compared to 1.3 percent for the period 1958 to 1989 (=-=Burnham, 1993-=-, Table 1 and p. 15). The entry of Japan and other Pacific Rim countries such as Hong Kong, Taiwan, Singapore, Thailand, Korea, Malaysia, and China into worldwide product markets has contributed to th... |
1 |
The Rigid Disk Drive Industry 1956-1990: A History of Commercial and Technological Turbulence
- Christensen
- 1993
(Show Context)
Citation Context ...as a capacity of 100 MIPS — 100 times the capacity of its 286 chip introduced in 1982 (Brandt, 1993). In addition, the progress of storage, printing, and other related technology has also been rapid (=-=Christensen, 1993-=-).Michael C. Jensen 16 1997 the industry—a force that has wracked IBM as a high-cost producer. A change of similar magnitude in auto production technology would have reduced the price of a $20,000 au... |
1 | Relationship Investing. Business Week. C. Jensen 64 - Dobrzynski - 1993 |
1 |
Struggle to Survive in the Town That Steel Forgot
- Fader
- 1993
(Show Context)
Citation Context ...uropean economies to open capitalist systems (at least some of which will make the transition in some form) could 23 Steel industry employment is now down to 160,000 from its peak of 600,000 in 1953 (=-=Fader, 1993-=-). 24 I am indebted to Steven Cheung for discussions on these issues. 25 Although migration will play a role it will be relatively small compared to the export of the labor in products and services. S... |
1 | Teams, Leaders and Oorganizations: New Directions for Crew-Oriented Flight training”. Cockpit Resource - Hackman - 1993 |
1 |
Active Investors, LBOs, and the Privitization of Bankruptcy
- Jensen
- 1989
(Show Context)
Citation Context ... of directors. 29 Shleifer and Summers (1988) seem to take the position that all implicit contracts should be enforced rigidly and never be breached.Michael C. Jensen 27 1997 As explained elsewhere (=-=Jensen, 1989-=-a, 1989b, 1991, Roe, 1990, 1991), the capital markets were relatively constrained by law and regulatory practice from about 1940 until their resurrection through hostile tender offers in the 1970s. Pr... |
1 | Campeau's Acquisition of Federated: Value Added or Destroyed - Kaplan - 1989 |
1 | Campeau's Acquisition of Federated: A Post-petition Post-mortem.” Working paper - Kaplan - 1992 |
1 |
Every Manager's Guide to Information Technology
- Keene
- 1991
(Show Context)
Citation Context ...USTAT. 18 “In 1980 IBM’s top-of-the-line computers provided 4.5 MIPs (millions of instructions per second) for $4.5 million. By 1990, the cost of a MIP on a personal computer had dropped to $1,000…” (=-=Keene, 1991-=-, p. 110). By 1993 the price had dropped to under $100. The technological progress in personal computers has itself been stunning. Intel’s Pentium (586) chip, introduced in 1993, has a capacity of 100... |
1 |
Corporate governance: Major issues for the 1990's.” Address to the Third Annual Corporate Finance Forum at
- Lipton
- 1989
(Show Context)
Citation Context ... American Business at the expense of research, development and capital investment. This is minimizing our ability to compete in world markets and still maintain a growing standard of living at home” (=-=Lipton, 1989-=-, p. 2). On average, selling-firm shareholders in all M&A transactions in the period 1976 to 1990 were paid premiums over market value of 41 percent, 9 and total M&A transactions generated $750 billio... |
1 | Directors, Wake Up! Fortune: 85-92. C. Jensen 67 - Magnet - 1992 |
1 | Sicherman and equity issues - Mann, Neil - 1991 |
1 |
Rethinking the Trust Question”. Regulation in
- McCraw
- 1981
(Show Context)
Citation Context ... corporate hierarchies, overcapacity, and, eventually, closure of facilities. (See the excellent discussions of the period by Chandler, 1977, 1990, 1992, Lamoreaux, 1985,Michael C. Jensen 5 1997 and =-=McCraw, 1981-=-, 1992.) Originating in Britain in the late eighteenth century, the First Industrial Revolution—as Chandler (1990, p. 250) labels it—witnessed the application of new energy sources to methods of produ... |
1 | Antitrust: The Perceptions and Reality in Coping with - McCraw - 1992 |
1 |
Coxey's Army: A Study of the Industrial Army Movement of 1894
- McMurray
- 1929
(Show Context)
Citation Context ...y of mankind; and the possessors of these in turn despise the republic and endanger liberty. From the same prolific womb of government injustice are bred two great classes of tramps and millionaires (=-=McMurray, 1929-=-, p. 7). Technological and other developments that began in the mid-twentieth century have culminated in the past two decades in a similar situation: rapidly improving productivity, the creation of ov... |
1 |
Executive Compensation in Corporate America
- Murphy
- 1992
(Show Context)
Citation Context ...000 largest firms (measured by market value of equity) held 2.7 percent of his or her firm’s equity in 1991, the median holding is only 0.2 percent , and 75 percent of CEOs own less than 1.2 percent (=-=Murphy, 1992-=-). 39 Encouraging outside board members to hold substantial equity interests would provide better incentives. Stewart (1990) outlines a useful approach using levered equity purchase plans or the sale ... |
1 | Chairman and Chief Executive Officer - Reynolds - 1988 |
1 | Why the Economic Data Mislead Us - Richman - 1993 |