Maksimovic and Zechner are at the University of British Columbia, and Sick is at the University of Calgary. This comment was written while Gordon Sick was visiting at UBC. The authors are grateful to an anonymous referee for helpful suggestions.
Comment on Forward Markets, Stock Markets, and the Theory of the Firm
Article first published online: 30 APR 2012
1989 The American Finance Association
The Journal of Finance
Volume 44, Issue 2, pages 525–528, June 1989
How to Cite
MAKSIMOVIC, V., SICK, G. and ZECHNER, J. (1989), Comment on Forward Markets, Stock Markets, and the Theory of the Firm. The Journal of Finance, 44: 525–528. doi: 10.1111/j.1540-6261.1989.tb05072.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
In a recent article, MacMinn  argues that the presence of forward markets eliminates the incentives of the firm's manager to choose production levels that maximize firm value. In this comment, we show that his results do not depend on the presence of forward markets. The critical assumptions are that the manager is endowed with money rather than stock in the firm and that there is no competitive labor market for managers. In addition, his results require time-inconsistent behavior on the part of the firm's manager.