Knowledge that Transforms

Also, Harry M. Markowitz, the author of “Investment for the Long Run: New Evidence for an Old Rule,” was inadvertently referred to as Henry M. Markowitz on the cover and in the index of the December 1976 issue of the Journal of Finance.

The recent literature on firm behavior has been characterized by two contrasting strands of analysis: on the one hand, there is the literature attempting to extend the conventional maxims of profit maximization of competitive firms from the familiar static models to dynamic contexts and into situations of uncertainty. These analyses argue that firms should maximize their stock market value and explore the implications of this for firm behavior. On the other hand, there is the vast and growing "managerial" literature, in which other objectives, such as "satisficing," "sales maximizing," and "maximization of the manager's utility functions" are postulated. The second group of analyses criticize the first as being unrealistic, while the first argues that it provides the best "first approximation" to firm behavior: if firms did not maximize their stock market value, or deviated far from value maximization, someone would attempt to take them over, change the course of action of the firm, and make a pure capital gain. This paper presents a unified framework for analyzing firm behavior which can be used to reconcile these divergent views.

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An abstract is not available for this content so a preview has been provided. As you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

An abstract is not available for this content so a preview has been provided. As you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

An abstract is not available for this content so a preview has been provided. As you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

An abstract is not available for this content so a preview has been provided. As you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

An abstract is not available for this content so a preview has been provided. As you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

A position of Assistant Professor of Finance may be available beginning in the 1978-79 academic year. We desire a person with excellent teaching ability and the capability and desire to engage in original research in business