Creating modern corporate finance。 2025. Donald H. Chu, Junior Columbia University Publishing Bureau, obtained in February 2025.
Donald Chu's future book, Creating modern corporate finance, It is a love letter to the people published in the Journal of Applied Corporate Finance, the author is the founder and the publisher. It is a love letter to free capitalism and financial systems that oil commercial gears. This book is interesting for a wide range of readers, but you should be able to read it for a CFA charter holder like me while pursuing the designation a few decades ago and catching up with the daily development of financial. 。 A perspective on financial innovation supporting today's global system.
The subtitles of “how to support the history of ideas and how they support the establishment of a rich nation” appropriately explains the arcs of book stories that function in chronological order through four “core subjects”. 。
- Company investment decision
- Company Financing decision
- Company Risk management
- Corporate Governance Investor communication
After the case study of the chapter of Japan, which effectively links corporate finances and social wealth, history is related to Franco Modiiani and Merton Mirror in the late 1950s and early 1960s. It starts with. Instead of capital structure, investors need to focus on profitability, at least, investing in projects that acquire capital costs, and how corporate risks are managed. In the case of a redrangeline with a capital structure, it also focuses on short -term revenue (EPS) per share. Chew is an investor who focuses on a quarterly EPS number, not a future profitability in Amazon.
The author pursued his solid opening in a well -cited papers on the special management costs of Michael Jensen and William Mecring, a debate on the expenses of professional management in shareholders' interests. I am. In the corporate management market, management is prompted to grow, not focusing on profitability. This led to the acquisition of different sector companies and the enlarged conglomerate in the 1970s, which promoted the reassurer of the Control through leverage dubiouts (LBO), and ultimately through private equity.
The large interest payments imposed by raising the LBOS debt funding paid attention to the administrator who redirected the management of the acquisition to the operation efficiency. Private equity (PE) has eliminated the issues of Jensen and Mecrings by managing board seats or removing target companies from the public market.
With the theoretical development of Modiiani, Miller, Gensen and Mecring, and Stewart Myers, the weighted average capital cost (WACC) is incorporated into the discounted cash flow method, and then the company's decision -making is to continue or abandon the project. Clifford Smith, Clifford Smith and RENE STULZ show the importance of corporate risk management as an essential element to maximize shareholder returns. There were practitioners who were eager to use new tools. The practitioners include the management of the company that adopted the concept of adding economic value (EVA) in Bennet Stewart. As a result, the responsibilities for various operational units changed from the focus of the intensive EPS, focusing on profitability.
Modern corporate finance also included the re -imagination of the corporate incentive structure for executives. Chu will be paid in the same way for the public company executives to be paid like the owner (remember that this will help eliminate the problem of the agency). I claim that it should be. If the wage structure and the amount are insufficient, the public company is looking for an excellent wage under private equity, which will be a mere training area for the best leader. Chu will explain the optimal structure of long -term incentive for some time.
Finally, the Corporate Finance's change in the development of a new market to support financial innovation. For many years of CFA Research Institute Financial analyst journal In addition, other publications see the complete chapter that emphasizes the extremely important roles of Marty Fridson, the editor of the book review when supporting the development of high -profit debt markets that respond to the storm of debt related to LBOS. You can do it.
The previous paragraph shows the structure of the book and the content of the content. However, the comprehensive story is the US economic power, not accumulated capital and military power, but financial innovation and dynamism. The first chapter about Japan is made by the difference between the conclusion of China and the difference between the financial system and the United States. So far, Chu has claimed that China's financial system has not been promised because it has exchanged innovation and dynamism for state control.
An example from history and geography can be considered. For example, a parallel that shows both Syrovents, such as Amazon AWS and online sales portals, over the vast technology companies that show both the synergistic effect, the synergistic effects, alphabets and advertisements, and the Amazon AWS and online sales portals. You can do it.
Did the manager of these companies solve the problem of the agency specified by JENSEN and MECKLING to develop better governance and more disciplined management? Many people have a dual -class shared structure that tilts the PE model, but the effects may be limited as they chew. Shareholders can accept the management of the founder during the excellent growth period, but can propose to switch to one voting system of one share.
Does the vast reach of the Technology Giants reflect other factors such as the concentration of the market, monopoly and Oligopoly return? Obviously, this is a different subject from the setting that the Chew is set to deal with (see the Tim Wu book, Bigness curse) The second question arises when Chu links its lofty US stock market to the national financial dynamism. He has a compelling claim, but market historians will notice that the US and international stock market premiums are coming and going over time.
Through books, Chu emphasizes the dominance of the US model and the power of corporate finances to create wealth and reduce the environment and social issues. For this purpose, he includes a thoughtful debate on the relationship between ESG and the relevance of companies and Boards. Nevertheless, sometimes his comments are in a wide range of, categorical, categorical roles in dealing with the problem, and the government's roles that provide the rules and infrastructure that are dependent on companies. Many of the problems may occur from corporate activities in the first place, and may not be dealt with without the actions of stakeholders or governments to enforce the problem.
Certainly, it is a small dissatisfaction, considering the attention of the book, the thoughtful and attractive structure, and the active anecdote. Not a low -capacity textbook is the touch of Chu's expert, the great historical outline of the corporate finance, and the continuous US outstanding. If you like previous works on the risks and capital market by Peter Bernstein, you will definitely enjoy it Creating corporate finance。
