Book Chapters
Jensen, Michael C., and Joseph Fuller. "What's a Director to Do?" In Best Practice: Ideas and Insights from the World's Foremost Business Thinkers, edited by Tom Brown and Robert Heller. Cambridge, Mass.: Perseus Publishing, 2003.

Jensen, Michael. "Value Maximization and the Corporate Objective Function." In Breaking the Code of Change, edited by Michael Beer and N. Nohria. Boston, Mass.: Harvard Business School Press, 2000. (Forthcoming in Management Revolution: The Legacy of the Market for Corporate Control, Harvard University Press. Reprinted in Business Ethics Quarterly, v 12, No 1, 2001, & European Financial Management, v.7, no.3, September 2001.)

Baker, George P., Michael C. Jensen, Carliss Y. Baldwin, and Karen H. Wruck. "Organizations and Markets at Harvard Business School, 1984-1996." In The Intellectual Venture Capitalist: John H. McArthur and the Work of the Harvard Business School, 1980-1995, edited by T. K. McCraw and J. L. Cruikshank. Boston: Harvard Business School Press, 1999.

Jensen, Michael. "Divisional Performance Measurement." In Foundations of Organizational Strategy, edited by M. C. Jensen, 345-361. Cambridge, Mass.: Harvard University Press, 1998.

Jensen, Michael C., and Donald Chew. "U.S. Corporate Governance: Lessons from the 1980s." In The Portable MBA in Investment, edited by P. Bernstein. New York: Wiley, 1995. (Abridged version published in Theory of the Firm: Governance, Residual Claims, and Organizational Forms, (Harvard University Press, 2000).)

Jensen, Michael C. "Takeovers: Their Causes and Consequences." In Readings in Mergers and Acquisitions, edited by P. A. Gaughan. Cambridge, Mass.: Basil Blackwell Publishers, 1994. (Also published in Journal of Economic Perspectives, Vol. 2, No. 1 (winter 1988); an abridged version forthcoming in Management Revolution: The Legacy of the Market for Corporate Control, (Harvard University Press).)

Jensen, Michael. "The Agency Costs of Free Cash Flow: Corporate Finance and Takeovers." In Management Buy-Outs, edited by Mike Wright and Keith Bradley, series editor, pp. 3-9. Part of International Library of Management series. England and Vermont: Dartmouth Publishing, 1994. (Also in AER, Vol. 76, No. 2 (May, 1986); abridged in Simon Management Rev, (Win, 1986); & forthcoming in Jensen, Management Revolution: The Legacy of the Market for Corporate Control, Harvard University Press.)

Jensen, Michael C., and Eugene F. Fama. "Separation of Ownership and Control." In Management of Non-profit Organizations, edited by S. M. Oster. Dartmouth Publishing, 1994. (Also published in Journal of Law and Economics, Vol. 26, No. 2 (June, 1983) and Michael C. Jensen, Foundations of Organizational Strategy, (Harvard University Press, 1998).)

Fama, Eugene F., Lawrence Fisher, Michael C. Jensen, and Richard J. Roll. "The Adjustment of Stock Prices to New Information." In Strategic Issues in Finance, edited by Keith Wand. Butterworth Heinemann, 1993. (Previously published in International Economic Review, Vol. 10 (Feb. 1969) and Investment Management: Some Readings, J. Lorie and R. Brealey, Eds (Praeger Publishers, 1972).)

Jensen, Michael C., and William H. Meckling. "Specific and General Knowledge and Organizational Structure." In Contract Economics, edited by L. Werin and H. Wijkander. Oxford, U.K.: Basil Blackwell Publishers, 1992. (Reprinted in Journal of Applied Corporate Finance, (Fall 1995) and Michael C. Jensen, Foundations of Organizational Strategy, (Harvard University Press, 1998).)

Jensen, Michael. "Arbitrage, Information Theft, and Insider Trading." In New Palgrave Dictionary of Money and Finance, edited by Peter Newman, Murray Milgate and John Eatwell. London: MacMillan Press, Ltd., 1992. (Earlier version, Arbitrage, Information Theft, and the Mistaken Attack On Insider Trading, published in "Chief Financial Officer U.S.A.", John Thackray, ed. (Sterling Publications, London: 1988), pp. 114-115.)

Jensen, Michael C. "Eclipse of the Public Corporation." In The Law of Mergers, Acquisitions, and Reorganizations, edited by D. A. Oesterle. St. Paul, Minn.: West, 1991. (Forthcoming in Management Revolution: The Legacy of the Market for Corporate Control, (Harvard University Press).)

Jensen, Michael C., Laura Stiglin, and Steven N. Kaplan. "Effects of LBOs on Tax Revenues of the U.S. Treasury." In The Law of Mergers, Acquisitions, and Reorganizations, edited by D. A. Oesterle. St. Paul, Minn.: West, 1991. (Forthcoming in Management Revolution: The Legacy of the Market for Corporate Control, Harvard University Press.)

Jensen, Michael C. "LBOs and the Reemergence of Institutional Monitoring of Managers." In Leveraged Management Buyouts: Causes and Consequences, edited by Yakov Amihud, pp. 263-268. Homewood, Ill.: Dow Jones Irwin, 1989.

Jensen, Michael. Comment on "Characteristics of Hostile and Friendly Takeover Targets." Proceedings of Conference on Corporate Takeovers: Causes and Consequences, edited by Alan Auerbach. University of Chicago Press, 1988.

Jensen, Michael. "The Takeover Controversy: Analysis and Evidence." In Knights, Raiders and Targets: The Impact of the Hostile Takeover, edited by John Coffee and Susan Rose-Ackerman. Oxford University Press, 1988. (Also in Midland Corporate Finance Journal, summer 1986; Stern, Stewart, & Chew, eds., Corporate Restructuring & Executive Compensation, Ballinger Pub, 1989; forthcoming in Jensen, Management Revolution, Harvard University Press.)

Jensen, Michael. "Takeovers: The Controversy and the Evidence." In Proceedings of the William G. Karnes Symposium on Mergers and Acquisitions. University of Illinois: Bureau of Economic and Business Research, 1986.

Jensen, Michael, and Clifford W. Smith Jr. "Stockholder, Manager, and Creditor Interests: Applications of Agency Theory." In Recent Advances in Corporate Finance, edited by E. I. Altman and M. G. Subrahmanyam. Homewood, Ill.: Richard D. Irwin, 1985. (Reprinted in Theory of the Firm: Governance, Residual Claims, and Organizational Forms, (Harvard University Press, 2000).)

Jensen, Michael. Comment on "Capital Structure Change and Decreases in Stockholders' Wealth." National Bureau of Economic Research Proceedings of Conference on Corporate Capital Structures in the United States. University of Chicago Press, 1984.

Jensen, Michael, and Clifford W. Smith Jr. "The Theory of Corporate Finance: A Historical Overview." In The Modern Theory of Corporate Finance, edited by Michael C. Jensen and Clifford W. Smith Jr., pp. 2-20. N.Y.: McGraw-Hill Book Company, 1984.

Jensen, Michael, and William H. Meckling. "Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure." In The Modern Theory of Corporate Finance, edited by Michael C. Jensen and Clifford W. Smith Jr. N.Y.: McGraw-Hill Book Company, 1984. (Also in Economics of Corporation Law & Securities Regulation, Posner & Scott, Eds, (Little Brown,1980); Jensen, Foundations of Organizational Strategy, (HUP, 1998); & Theory of the Firm. . . (HUP, 2000) and JFE.)

Jensen, Michael, and William H. Meckling. "Corporate Governance and 'Economic Democracy': An Attack on Freedom." In Corporate Governance: A Definite Exploration of the Issues, edited by C. J. Huizenga., 1983.

Jensen, Michael C., and William H. Meckling. "Reflections on the Corporation as a Social Invention." In Controlling the Giant Corporation: A Symposium. Rochester, N.Y.: Center for Research in Government Policy and Business, Graduate School of Management, University of Rochester, 1982. (Reprinted in the Midland Corporate Finance Journal, Vol. 1, No. 3 (autumn 1983); reprinted in International Institute for Economic Research Reprint Paper 18 (November 1983).)

Jensen, Michael. "Tests of Capital Market Theory and Implications of the Evidence." In Handbook of Financial Economics, edited by J. L. Bicksler. North-Holland Publishing Company, 1980. (Originally published in Is Financial Analysis Useless? Proceedings of a Seminar on the Efficient Market and Random Walk Hypotheses (The Financial Analysts Research Foundation, 1975).)

Jensen, Michael C. "Toward a Theory of the Press." In Economics and Social Institutions, edited by Karl Brunner. Martinus Nijhoff Publishing Company, 1979.

Jensen, Michael, and William H. Meckling. "Conflict Between the Political and Private Sectors." In Study of World Economic Change. Booz Allen Hamilton, 1978.

Jensen, Michael C. "The Debasement of Contracts and the Decline of Capital Markets." In The World Capital Shortage, edited by Alan Heslop. Indianapolis, Ind.: Bobbs-Merrill Co., Inc., 1977.

Jensen, Michael. "Reflections on the State of Accounting Research and the Regulation of Accounting." In Stanford Lectures in Accounting. Palo Alto, Calif.: Graduate School of Business, Stanford University, 1976.

Benington, George A., and Michael C. Jensen. "Random Walks and Technical Theories: Some Additional Evidence." In Security Evaluation and Portfolio Analysis, edited by E. Elton and M. Gruber. Prentice-Hall, 1972. (Also published in Journal of Finance (May 1970) and Investment Management: Some Readings, J. Lorie and R. Brealey, Editors (Praeger Publishers, 1972).)

Jensen, Michael C., and Martin J. Bailey. "Risk and the Discount Rate for Public Investment." In Studies in the Theory of Capital Markets, edited by M. C. Jensen. Praeger Publishers, 1972.

Black, Fischer, Michael C. Jensen, and Myron Scholes. "The Capital Asset Pricing Model: Some Empirical Tests." In Studies in the Theory of Capital Markets, edited by M. C. Jensen. Praeger Publishers, 1972.

Jensen, Michael C. "The Foundation and Current State of Capital Market Theory." In Studies in the Theory of Capital Markets, edited by M. C. Jensen. Praeger Publishers, 1972.

Jensen, Michael. "Optimal Utilization of Market Forecasts and the Evaluation of Portfolio Performance." In Mathematical Methods in Finance, edited by G. P. Szego and Karl Shell. North-Holland Publishing Company, 1972.

Jensen, Michael. "The Performance of Mutual Funds in the Period 1945-1964." In Investment Management: Some Readings, edited by J. Lorie and R. Brealey. Praeger Publishers, 1972. (Previously published in Journal of Finance (May, 1968).)

Jensen, Michael. "Risk, the Pricing of Capital Assets, and the Evaluation of Investment Portfolios." In Frontiers of Investment Analysis, edited by E. Bruce Fredrikson. International Textbook Company, 1971. (Previously published in Journal of Business, Vol. 42 (April, 1969).)

Jensen, Michael. "The Time Series Behavior of Earnings: Discussion." In Empirical Research in Accounting: Selected Studies, The Institute of Professional Accounting, Graduate School of Business, University of Chicago, 1970.

Jensen, Michael. "Determinants of Mutual Fund Performance." In Proceedings of the Seminar on the Analysis of Security Prices, University of Chicago Press, 1967.



Other Papers
Jensen, Michael C., and William H. Meckling. "Specific Knowledge and Divisional Performance Measurement." Harvard Business School Working Paper, No. 10-025, September 2009. Abstract

This paper discusses five common divisional performance measurement methods - cost centers, revenue centers, profit centers, investment centers, and expense centers - while providing a theory that explains when each of these methods is likely to be the most efficient. The central insight of the theory is that each method offers a different way of aligning decision-making authority with valuable "specific knowledge" inside the organization.

The theory suggests that cost and revenue centers work best in cases where headquarters has good information about cost and demand functions, product quality, and optimal output mix. Profit centers - defined as business units whose managers have responsibility for overall profits, but not the authority to make major capital spending decisions - tend to supplant revenue and cost centers when line managers have a significant informational advantage over headquarters and when there are few interdependencies (or "synergies") between divisions. Investment centers-profit centers in which unit managers are allowed to make major investment decisions - tend to prevail when the activity is capital-intensive and when it is difficult for headquarters to identify the value-maximizing investment strategy for the business unit.

In evaluating the performance of profit centers, rate-of-return measures like ROA are likely to be effective when unit managers do not have major influence over the level of new investment. But, in the case of investment centers, Economic Value Added, or EVA, is likely to be the most effective single-period measure because it is designed to encourage only value-increasing investment decisions.



Erhard, Werner, Michael C. Jensen, Steve Zaffron, and Kari L. Granger. "The Ontological Foundations of Leadership and Performance: Being a Leader, and the Effective Exercise of Leadership, A New Model." Harvard Business School Working Paper, No. 09-022, August 2008. Abstract

This paper is the (pre-course) introduction document to an experimental course developed by the authors and taught at the U. of Rochester Simon School of Business. The intention of the course is to leave the participants actually being leaders and being able to exercise leadership effectively, and for the course to contribute to creating a new science of leadership. The course is founded on an ontological model of human nature.

By ontological we mean the following: If you have ever wondered what it would be like to be a bird, or wondered what it is like to be your dog, or to be a person of the opposite gender, or what it is like to be some particular friend of yours, you were in an ontological inquiry.

Ontology as a general subject is concerned with the being of anything.  However, here we are concerned specifically with the ontology of human beings, that is, the being of a human being.

For a narrower and therefore easier example of being, we can talk about being angry, or being antisocial, or being a man or woman of character.  We could examine these ways of being from the comfort of our somewhat familiar perspectives of the science of psychology or neuroscience.

While less familiar for us and therefore perhaps at first uncomfortable, it is also possible to examine any of these ways of being from an ontological perspective. Here we would be examining the being aspect of being angry, or being antisocial, or being a man or woman of character. (Webster’s Dictionary (1998) defines being as "fundamental or essential nature".)  From this perspective we clearly see that when we are being angry, we are likely to act in anger.  Likewise for being antisocial, or being a man or woman of character.  From the ontological perspective it is clear that being constrains and shapes behavior.

The ontological perspective is powerful when dealing with the being of being a leader, and being able to exercise leadership effectively.  Like acting in anger when we are being angry, or acting with ease if we are being at ease, or acting with confidence when we are being confident, if we master the being of being a leader, we are likely to act as a leader, and effectively exercise leadership.  And, this course is about being a leader, and acting effectively in exercising leadership as a natural consequence of being a leader.

Effective leadership does not come from mere knowledge about what leaders do, or trying to emulate the characteristics or styles of noteworthy leaders, or from trying to remember and follow the steps, tips or techniques from books on leadership, and certainly not from merely being in a leadership position, or position of authority.

An epistemological mastery of a subject leaves you knowing.  An ontological mastery of a subject leaves you being.  This course is about access to being a leader, and being able to exercise leadership effectively.

If you are not being a leader, and you try to act like a leader, you are likely to fail.  That's called being inauthentic, or pretending to be a leader.

If you are being a leader, you will act as a leader.

Our Promise:
You will have experienced whatever personal transformation is required for you to leave the course being who you need to be to be a leader, and with what it takes to exercise leadership effectively.



Jensen, Michael C., Kevin J. Murphy, and Eric Wruck. "Remuneration: Where We’ve Been, How We Got to Here, What Are the Problems, and How to Fix Them." ECGI Working Paper Series in Finance Working Paper Series, No. 44-2004, 2004 (Also in the Negotiation, Organizations and Markets Research Paper Series, Harvard Business School NOM Research Paper No. 04-28.)

Jensen, Michael C. "Agency Costs of Overvalued Equity." ECGI Working Paper Series in Finance Working Paper Series, No. 39-2004, 2004 (This paper is drawn from “The Agency Cost of Overvalued Equity and the Current State of Corporate Finance” (Keynote Lecture, European Financial Management Association), London, June 2002. It is also included in the Negotiation, Organizations and Markets Research Paper Series, Harvard NOM Research Paper No. 04-26.)

Jensen, Michael C., and Joseph Fuller. "What's a Director to Do?" Harvard NOM Research Paper Series, No. 02-38, 2002.

Holderness, Clifford G., Michael C. Jensen, and William H. Meckling. "The Logic of the First Amendment." Harvard Business School Working Paper, No. 00-064, 2000.

Jensen, Michael C. "Value Maximization and the Corporate Objective Function." Harvard Business School Working Paper, No. 00-058, 2000.

HBS Course Materials
Baldwin, Carliss Y., Michael C. Jensen, and Karen Wruck. "Case of the Colored Post-It Notes." Harvard Business School Case 897-069.

Jensen, Michael C., and Kevin J. Murphy. "Compensation at Lexerd Systems." Harvard Business School Case 494-066.

Jensen, Michael C., George P. Baker III, and Karen Wruck. "Discussion Problem: Agency Problems and Corporate Jets." Harvard Business School Exercise 192-012.

Jensen, Michael C., George P. Baker III, and Karen Wruck. "Duffy-Mott." Harvard Business School Exercise 192-019.

Jensen, Michael C., and Karen Wruck. "Fighton, Inc. (A)." Harvard Business School Case 391-056.

Jensen, Michael C., and Karen Wruck. "Fighton, Inc. (A) and (B), Teaching Note." Harvard Business School Teaching Note 491-111.

Jensen, Michael C., and Karen Wruck. "Fighton, Inc. (B)." Harvard Business School Supplement 391-265.

Jensen, Michael C. "General Bill Creech at Harvard Business School: October 6, 1995." Harvard Business School Video Supplements 899-504.

Jensen, Michael C., and Brian Barry. "Gordon Cain." Harvard Business School Video Supplements 899-503.

Jensen, Michael C. "Gordon Cain and the Sterling Group (A)." Harvard Business School Case 492-021.

Jensen, Michael C. "Gordon Cain and the Sterling Group (B)." Harvard Business School Supplement 492-022.

Jensen, Michael C., and Brian Barry. "Gordon Cain and the Sterling Group Series TN." Harvard Business School Teaching Note 899-051.

Jensen, Michael C., George P. Baker III, and Karen Wruck. "Mr. Hustle (A1)." Harvard Business School Exercise 192-016.

Jensen, Michael C. "Mr. Hustle (A2)." Harvard Business School Exercise 194-011.

Cash, James I., Jr., and Michael C. Jensen. "Newhall Land and Farming Co. (A)." Harvard Business School Case 192-049.

Cash, James I., Jr., and Michael C. Jensen. "Newhall Land and Farming Co. (B)." Harvard Business School Case 192-050.

Jensen, Michael C. "Productivity of R&D and Capital Expenditures: Some Examples." Harvard Business School Case 293-079.

Baker, George P., Carliss Y. Baldwin, Michael C. Jensen, Karen Wruck, and Perry Fagan. "Value Creation." Harvard Business School Case 396-089.

Baker, George P., III, Michael C. Jensen, Karen Wruck, and Perry Fagan. "Value Creation: Abridged." Harvard Business School Case 898-185.

Jensen, Michael C., Willy Burkhardt, and Brian Barry. "Wisconsin Central Ltd. Railroad and Berkshire Partners (A): Leveraged Buyouts and Financial Distress." Harvard Business School Case 190-062.

Jensen, Michael C. "Wisconsin Central Ltd. Railroad and Berkshire Partners (B): LBO Associations and Corporate Governance." Harvard Business School Supplement 190-070.

Jensen, Michael C., and Brian Barry. "Wisconsin Central Ltd. Railroad and Berkshire Partners Series TN." Harvard Business School Teaching Note 899-050.

Jensen, Michael C., and Brian Barry. "Wisconsin Central Ltd. Railroad and Berkshire Partners, Video." Harvard Business School Video Supplements 891-509.