Uncover the Secrets Behind Modern Corporate Finance in this Game-Changing Book!

In 2025, Donald H. Chew, Jr. is set to release a groundbreaking book titled “The Making of Modern Corporate Finance” with Columbia University Press. This upcoming publication serves as a tribute to the Journal of Applied Corporate Finance, offering valuable insights into the realm of unfettered capitalism and its crucial role in fueling global commerce.

When exploring the intricacies of corporate finance, Chew delves into the historical development of key ideas that have shaped the financial landscape. With a focus on the evolution of four core subjects, including the corporate investment decision, corporate financing decision, enterprise risk management, and corporate governance, the book outlines a compelling narrative capturing the essence of wealth generation and economic growth.

1. Capital Structure and Dividend Irrelevance: Chew sheds light on pivotal works by visionaries such as Franco Modigliani and Merton Miller, emphasizing the importance of focusing on earnings power rather than fixating on superficial metrics like earnings per share.

2. Agency Costs and Management Incentives: The discussion on agency costs, spearheaded by Michael Jensen and William Meckling, underscores the challenges surrounding aligning management interests with shareholder value. The concept of corporate takeovers, leveraged buyouts, and private equity as mechanisms to address these issues is thoroughly examined.

3. The Role of Risk Management: The book delves into the significance of enterprise risk management and its impact on maximizing shareholder returns. Notable contributions by Cliff Smith and Rene Stulz highlight the essential nature of managing corporate risks in the pursuit of financial prosperity.

4. Incentivizing Executives and ESG Considerations: Chew also explores the reimagined incentive structures for corporate executives, drawing parallels between private equity-owned companies and their public counterparts. Furthermore, a thoughtful discussion on ESG issues and corporate responsibility adds a layer of complexity to the narrative, underscoring the multifaceted nature of modern corporate finance.

By charting the historical progression of corporate finance, Chew paints a compelling picture of the United States’ economic prowess, characterized by financial innovation and resilience. From the dynamics of conglomerates in the 1970s to today’s tech behemoths, the book offers a nuanced perspective on governance, market concentration, and the evolving role of companies in societal progress.

As readers embark on this enlightening journey through the annals of modern corporate finance, they are invited to ponder the intricate interplay between financial markets, governance structures, and societal welfare. Chew’s meticulous attention to detail, engaging anecdotes, and profound insights elevate what could have been a mundane textbook into a captivating historical exposition.

In essence, “The Making of Modern Corporate Finance” stands as a testament to the enduring legacy of corporate finance in shaping nations’ wealth and prosperity. Just as Peter Bernstein’s seminal works on risk and capital markets have resonated with audiences, Chew’s magnum opus promises to captivate and inspire those seeking a deeper understanding of the intricate world of finance.