No replies to this topic

[dasein]

even tho its written in 2005.

It is similar to my thesis (but way better researchd and said) and why I would say to da Chief, theres a lot wrong.

http://papers.ssrn.c...tract_id=480421

Agency Costs of Overvalued Equity

MICHAEL C. JENSEN
Harvard Business School; The Monitor Company; Social Science Electronic Publishing (SSEP), Inc. March 2005

Harvard NOM Working Paper No. 04-26; ECGI - Finance Working Paper No. 39/2004

Overview:
I define and analyze the agency costs of overvalued equity. They explain the dramatic increase in corporate scandals and value destruction in the last five years; costs that have totaled hundreds of billions of dollars. When a firm's equity becomes substantially overvalued it sets in motion a set of organizational forces that are extremely difficult to manage - forces that almost inevitably lead to destruction of part or all of the core value of the firm. WorldCom, Enron, Nortel, and eToys are only a few examples of what can happen when these forces go unmanaged. Because we currently have no simple solutions to the agency costs of overvalued equity this is a promising area for future research.