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In practice, shareholders delegate their control rights to a board of directors, who hire, fire and set the compensation of the chief officers of the firm. However, because agents have different incentives than the principals they represent, they can destroy corporate value unless closely monitored. This happened in the 1960s and led to hostile takeovers in the market for corporate control in the 1970s and 1980s. The author argues that the takeover movement generated increases in corporate efficiency that exceeded USD1.5 trillion and helped to lay the foundation for the great economic boom of the 1990s.

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Book Details

ISBN: 9780674012295
ISBN-10: 0674012291
Format: Paperback
(235mm x 155mm x 19mm)
Pages: 323
Imprint: Harvard University Press
Publisher: Harvard University Press
Publish Date: 2-Sep-2003
Country of Publication: United States

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Author Biography - Michael C. Jensen

Michael C. Jensen is Jesse Isidor Straus Professor of Business Administration Emeritus, Harvard Business School.

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