Michael Jensen

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Michael C. Jensen joined the faculty of the Harvard Business School in 1990. Currently, he is the managing director in charge of organizational strategy at Monitor Group, a strategy consulting firm.

Before that, he was a professor of finance and business administration at the William E. Simon Graduate School of Business Administration, University of Rochester, Rochester, New York.

He was a visiting scholar at the Tuck School of Business at Dartmouth College through the 1990-1992 academic year, and in 1995 he was named a fellow of the European Corporate Governance Institute.

He received both his M.B.A. (1964) and Ph.D. (1968) degrees from the University of Chicago Graduate School of Business, notably working with Professor Merton Miller.

Prof. Jensen has played an important role in the academic discussion of the capital asset pricing model, of stock options policy, and of corporate governance, developing a method of measuring fund manager performance, the so-called Jensen's measure.

Jensen's best-known work is the 1976 paper he co-authored with William H. Meckling, "Theory of the firm: Managerial behaviour, agency costs and ownership structure," one of the most widely-cited economics papers of the last 30 years. Besides reigniting interest in theory of the firm (a field pioneered by Ronald Coase), the paper's argument that managers' interests are different from those of shareholders laid the foundation for the widespread use of stock options as executive compensation tools.