Michael C. Jensen

Michael Cole Jensen (1939 to 2024) was an American financial economist who spent his career at the University of Rochester and Harvard Business School. He is among the most cited economists of all time. With William Meckling he wrote the 1976 article Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, which set out agency theory and treated the corporation as a nexus of contracts. He also developed Jensen's alpha, a measure of the risk adjusted performance of fund managers, and argued in 1986 that debt financing disciplines managers who hold surplus free cash flow. He co-founded the Journal of Financial Economics in 1974 and the Social Science Research Network in 1994, and he served as president of the American Finance Association in 1992. He died in Sarasota, Florida, on 2 April 2024.