Article 1 Review

The main thing that the article talks about is how the different theories of economics have tried to fix the market from crashing. Instead of looking at what has caused the crashes they have been more focused on the symptoms. There were a couple of theories discussed, shareholder value theory and agency theory.

I believe that what Jensen did by tying the real market and expectation market together was a wise idea. In a real market executives are able to control, partially, the bottom line of a business.  The investors are the ones that are going to be the ones that help the company be able to be more profitable by allowing there to be more money available. This is going to happen by how well that company has performed in the past and how they are expected to perform in the future.

I don’t know if it necessarily fills a void in the existing literature, but it does provide an interesting light on the subject. While most people are just looking to fix a problem when it happens, Jensen and Meckling were looking at what is causing the issues.

I don’t believe that there is really any breakthrough information in the article. However, there is information that people may have overlooked. Jensen acknowledged the side effects, which are just as important as the problem itself.

I’m sure that others relative in the field wont necessarily revise their ideas about the subject. Back when the article was published, and probably still today, there were many debates on how they were right/wrong about the subject. Each side is sure to have strong arguments on how they are correct and the other side is wrong. It doesn’t necessarily make either side right/wrong; it just means they have an opinion.

I’m sure it is a rehash of previously known information. However, the way that the article says they “published a seemingly innocuous paper”. Means that there may not have been much discussion at the time as to looking at the source of the economic problem, more just trying to fix the problem as it happened.

I believe that the article was well written and the message is clear that they are trying to get across.  There doesn’t appear to be any missing important information. There seems to be ample research as there an example given that is easy enough to look up and verify the information given.