Why did the “stagflation” of the 1970s—the improbable combination of high unemployment and runaway inflation—prove so painful and protracted? What explains the U.S. stock market’s remarkable forty-year run of 12 percent average annual returns since then? Why is Japan still mired in a decades-long recession—and the Chinese economy in a tailspin? And what accounts for the resilience of U.S. stock and labor markets in the wake of the COVID-19 pandemic and in the face of the Fed’s record interest rate hikes? Donald H. Chew, Jr., argues that answers to these questions lie in the principles and methods of “modern corporate finance.” Ideas formulated and tested by finance scholars—notably, an efficient stock market in which prices reflect the long-run values of public companies and a “market for corporate control” that exerts continuous pressure on management—informed and spurred the investor-driven capitalism that has created the world’s most productive and valuable companies. Drawing on
