This special acknowledgement by the The Journal of Financial Research came with a $3,000 prize for the authors of the paper, “Corporate Governance and Capital Structure: An Empirical Study.” The other co-authors are Li-Kai Liao and Wei Wang.
The paper provides the first empirical study of a theory put forth in existing literature about financial leverage in corporate management. “Financial leverage” refers to the conflict between maximizing shareholder profits while maximizing a manager’s individual wealth. According to Mukherjee, Nobel Laureates Franco Modigliani and Merton Miller started a debate in 1958, stating that the mixture of debt and equity a firm uses to finance investments is irrelevant to the firm's value.
“Many theories have evolved since that time to explain a firm’s behavior towards its capital structure, including the trade-off theory that suggest that an optimal mixture occurs where the benefit of debt is traded off against the cost of debt," Mukherjee said. "We contribute to this body of work by providing indirect evidence that stockholders prefer the firm to adhere to an optimal capital structure. This recognition is particularly special because the associate editors, who are among the best known world scholars in finance, select the two best papers."
Located in New Orleans, Louisiana, the University of New Orleans opened in 1958 after it was established by Act 60 of the 1956 Louisiana Legislature. It has 8,423 students.