Agency Costs of Overvalued Equity

By Michael C. Jensen. 2005

194 citations recorded by the source corpus.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/2d0098d4a632be953edb827e05e80a37b67ac9aa

Citations in the corpus

• Conforming Tax Avoidance and Capital Market Pressure (2019, unknown): “To construct our sample of quasi-private firms, we follow Katz (2009) and Givoly et al.”
• Firm Life Cycle, Corporate Risk Taking, and Investor Sentiment (2017, unknown): “STD_RET Annual standard deviation of monthly stock returns, computed from return data (RET) from the CRSP R&D/TA Research and Development expense (XRD) scaled by total asset (AT) Firm Life Cycle Proxies CLC A vector of dummy variables that capture firms’ different stages in the life cycle RE/TA SENT”
• Gains from Mergers and Acquisitions Around the World: New Evidence (2010, unknown): “…fierce competition for listed targets is likely to enhance managerial hubris-related effects that, due to the winner’s curse, can lead to reduced gains for acquirers.2 In addition, the presence of competition can exacerbate the negative effects of agency problems discussed by Jensen (1986, 2005).”
• Financial Reporting and the Protection of Socioemotional Wealth in Family-Controlled Firms (2014, unknown): “Managers might be unwilling to engage in earnings management because of the negative consequences that this might have on future accounting decisions and earnings, especially when the firm’s stock price is substantially out of line with the real value of the firm (Jensen, 2005; McVay, 2006).”
• The Spillover Effect of Fraudulent Financial Reporting on Peer Firms’ Investments (2013, unknown): “On a related note, Jensen (2005) argues that when equity is overvalued, analysts pressure managers for higher growth to justify the valuation, leading managers to make greater capital investments than they would otherwise make.”
• Why Do Corporate Managers Misstate Financial Statements? the Role of Option Compensation and Other Factors (2007, unknown): “When the firm's stock price becomes overvalued (i.e., 100%—or even 1,000%—above underlying firm value), potential conflicts of interest between managers and owners expand (Jensen, 2005a).”
• The Irrelevance of the Mm Dividend Irrelevance Theorem (2006, unknown): “Section 4 discusses applications of our analysis, including its relation to Jensen’s (1986) free cash flow theory, the issue of what the market ‘‘really’’ capitalizes, and why payout policy matters in a stock bubble.”
• The Cost to Firms of Cooking the Books (2008, unknown): “Jensen (2005) argues that managers sometimes engage in value-destroying activities to prop up overvalued shares.”
• Big Data as a Governance Mechanism (2019, unknown): “I document that increased price efficiency can have a disciplining effect on corporate managers, consistent with theories of the effect of price on managerial actions (e.g., Holmstrom and Tirole 1993; Polk and Sapienza 2009; Jensen 2005; Baker et al. 2003).”
• Corporate Governance and Social Responsibility: A Comparative Analysis of the UK and the Us (2006, unknown): “…companies is characterised less by collaborative pursuit of the long-term health of the company and more by scripted communications between analysts and corporate investor relations departments as company managers stretch to meet securities analysts’ quarterly financial projections (Jensen, 2005).”