scispace - formally typeset

JournalISSN: 0304-405X

Journal of Financial Economics 

About: Journal of Financial Economics is an academic journal. The journal publishes majorly in the area(s): Market liquidity & Stock (geology). It has an ISSN identifier of 0304-405X. Over the lifetime, 3325 publication(s) have been published receiving 972222 citation(s).
More filters

Journal ArticleDOI
Abstract: In this paper we draw on recent progress in the theory of (1) property rights, (2) agency, and (3) finance to develop a theory of ownership structure for the firm.1 In addition to tying together elements of the theory of each of these three areas, our analysis casts new light on and has implications for a variety of issues in the professional and popular literature, such as the definition of the firm, the “separation of ownership and control,” the “social responsibility” of business, the definition of a “corporate objective function,” the determination of an optimal capital structure, the specification of the content of credit agreements, the theory of organizations, and the supply side of the completeness-of-markets problem.

45,832 citations

Journal ArticleDOI
Eugene F. Fama1, Kenneth R. French1Institutions (1)
Abstract: This paper identities five common risk factors in the returns on stocks and bonds. There are three stock-market factors: an overall market factor and factors related to firm size and book-to-market equity. There are two bond-market factors. related to maturity and default risks. Stock returns have shared variation due to the stock-market factors, and they are linked to bond returns through shared variation in the bond-market factors. Except for low-grade corporates. the bond-market factors capture the common variation in bond returns. Most important. the five factors seem to explain average returns on stocks and bonds.

22,909 citations

Journal ArticleDOI
Stewart C. Myers1, Nicholas S. Majluf2Institutions (2)
Abstract: This paper considers a firm that must issue common stock to raise cash to undertake a valuable investment opportunity. Management is assumed to know more about the firm's value than potential investors. Investors interpret the firm's actions rationally. An equilibrium model of the issue-invest decision is developed under these assumptions. The model shows that firms may refuse to issue stock, and therefore may pass up valuable investment opportunities. The model suggests explanations for several aspects of corporate financing behavior, including the tendency to rely on internal sources of funds, and to prefer debt to equity if external financing is required. Extensions and applications of the model are discussed.

12,954 citations

Journal ArticleDOI
Stewart C. Myers1Institutions (1)
Abstract: Many corporate assets, particularly growth opportunities, can be viewed as call options. The value of such ‘real options’ depends on discretionary future investment by the firm. Issuing risky debt reduces the present market value of a firm holding real options by inducing a suboptimal investment strategy or by forcing the firm and its creditors to bear the costs of avoiding the suboptimal strategy. The paper predicts that corporate borrowing is inversely related to the proportion of market value accounted for by real options. It also rationalizes other aspects of corporate borrowing behavior, for example the practice of matching maturities of assets and debt liabilities.

11,862 citations

Journal ArticleDOI
Abstract: We investigate the relationship between management ownership and market valuation of the firm, as measured by Tobin's Q. In a 1980 cross-section of 371 Fortune 500 firms, we find evidence of a significant nonmonotonic relationship. Tobin's Q first increases, then declines, and finally rises slightly as ownership by the board of directors rises. For older firms, there is evidence that Q is lower when the firm is run by a member of the founding family than when it is run by an officer unrelated to the founder.

7,252 citations

Network Information
Related Journals (5)
Review of Financial Studies

2.3K papers, 394.1K citations

97% related
Journal of Finance

6.1K papers, 1.3M citations

94% related
Journal of Accounting and Economics

1.1K papers, 272.3K citations

91% related
Journal of Banking and Finance

5.7K papers, 379.6K citations

90% related
National Bureau of Economic Research

7.7K papers, 213.6K citations

87% related
No. of papers from the Journal in previous years