Dow, James; Gorton, Gary; Krishnamurthy, Arvind - In: American Economic Review 95 (2005) 3, pp. 659-681
We integrate a widely accepted version of the separation of ownership and control—Michael Jensen's (1986) free cash flow theory—into a dynamic equilibrium model, and study the effect of imperfect corporate control on asset prices and investment. Aggregate free cash flow of the corporate...