Dobbin, FrankJung, Jiwook2017-04-132010Dobbin, Frank, and Jiwook Jung. 2010. “The Misapplication of Mr. Michael Jensen: How Agency Theory Brought down the Economy and Why It Might Again.” Markets on Trial: The Economic Sociology of the U.S. Financial Crisis: Part B (January): 29–64. doi:10.1108/s0733-558x(2010)000030b006.0733-558Xhttp://nrs.harvard.edu/urn-3:HUL.InstRepos:32116910Agency theorists diagnosed the economic malaise of the 1970s as the result of executive obsession with corporate stability over profitability. Management swallowed many of the pills agency theorists prescribed to increase entrepreneurialism and risk-taking; stock options, dediversification, debt financing, and outsider board members. Management did not swallow the pills prescribed to moderate risk: executive equity holding and independent boards. Thus, in practice, the remedy heightened corporate risk-taking without imposing constraints. Both recessions of the new millennium can be traced directly to these changes in strategy. To date, regulators have proposed nothing to undo the perverse incentives of the new “shareholder value” system.en-USMonograph or Book2013-05-16Dobbin, Frank and Jiwook Jung10.1108/S0733-558X(2010)000030B006