MALKIEL, Burton G.; William J. Baumol.
The Quarterly Journal of Economics: The Firm's Optimal Debt-Equity Combination and the Cost of Capital.
Cambridge, Massachusetts: The Quarterly Journal of Economics , 1967.
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An Offprint of the November 1967 Issue of The Quarterly Journal of Economics, Containing William J. Baumol and Burton Malkiel's "The Firm's Optimal Debt-Equity Combination and the Cost of Capital"; Signed by Burton Malkiel and From His Own Personal Collection
Rare offprint of the November 1967 issue of The Quarterly Journal of Economics, containing William J. Baumol and Burton Malkiel's article "The Firm's Optimal Debt-Equity Combination and the Cost of Capital." Octavo, original wrappers, volume 81. Boldly signed by Burton Malkiel on the front wrapper. Burton Gordon Malkiel (born 1932) is one of the most consequential financial economists of the postwar American academy, whose career as scholar, institutional leader, and public intellectual has made him a central figure at the intersection of investment theory, market efficiency, and public policy. Educated at Harvard and Princeton, where he spent the most productive decades of his career as Chemical Bank Chairman’s Professor of Economics, Malkiel also served as Dean of the Yale School of Management from 1981 to 1988 and as a member of the President’s Council of Economic Advisers under Gerald Ford from 1975 to 1977. His scholarly output encompasses foundational contributions across the term structure of interest rates, convertible security valuation, corporate capital structure, closed-end fund discounts, mutual fund performance, and gender pay differentials in professional employment, producing a body of work whose empirical breadth places him among the most versatile financial economists of his generation. His long service on the board of directors of The Vanguard Group connects his academic advocacy for passive investing to the institutional infrastructure that has most fully realized it in practice. It is nevertheless A Random Walk Down Wall Street, first published in 1973 and now in its thirteenth edition, that secured his place in the broader culture: a work of lucid, empirically grounded argument for market efficiency and index fund investing that has sold over 1.5 million copies and permanently altered the investment behavior of millions of individual investors worldwide. From the personal collection of Burton Malkiel. In fine condition.
"The Firm's Optimal Debt-Equity Combination and the Cost of Capital," published in The Quarterly Journal of Economics, Volume 81, Issue 4, November 1967, is a foundational contribution to the theory of corporate capital structure by William J. Baumol and Burton G. Malkiel, written at a moment when the field had been fundamentally unsettled by the celebrated Modigliani-Miller propositions of 1958 and their subsequent qualifications. Baumol, who held the notable distinction of having supervised Malkiel's doctoral dissertation at Princeton University, here collaborated with his former student to develop a rigorous analytical framework for determining the optimal mix of debt and equity financing from the perspective of the firm, addressing in sequence the opportunity cost of capital, the formal mathematical relationships governing financial structure, a diagrammatic approach to cost of capital analysis, the role of transactions costs and taxes in practice, the characteristics of an optimal financial structure, the real marginal cost of debt and equity, a measure of the cost of capital as a weighted average, and the conditions under which that weighted average is minimized. The paper was sufficiently consequential to attract a direct response from Joseph Stiglitz, whose 1974 paper in the American Economic Review on the irrelevance of corporate financial policy cited the Baumol-Malkiel article as its primary point of engagement, and it has since been cited extensively in the literature on optimal capital structure, project financing, and the cost of capital that it helped to shape.
The Quarterly Journal of Economics: The Firm's Optimal Debt-Equity Combination and the Cost of Capital.
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