In this series, three key axioms—stockholder wealth maximization, the risk-return tradeoff, and agency conflicts—are applied to the major topics in financial management. The current article looks at mergers and acquisitions, reviewing the presumed motivations, the ethical challenges, and the literature dedicated to this financial activity.
This series on the theory of financial management offers insight into the roles of stockholder wealth maximization, the risk-return tradeoff, and agency conflicts as they apply to major topics in finance. The current article investigates capital budgeting. Much literature addresses this topic, with a number of articles challenging mainstream theories, some investigating agency problems, and a few empirically testing the relationships taught in most managerial finance classrooms.
This series inspects the major topics in finance, reviewing the roles of stockholder wealth maximization, the risk-return tradeoff, and agency conflicts. The current article, devoted to dividend policy, also reviews the topic as presented in textbooks and the literature.