ABSTRACT
The changes which took place in Drexel in the 1970s and 1980s accelerated the transformation from sales and marketing control to financial control of American corporations. Drexel implemented the agency model of incentive systems to its fullest. In order for Drexel to control the functioning of its High-Yield Bond Department it had to be able to monitor and administer the work of its employees and the transactions taking place within the department. During the 1970s recession, Michael Milken used W. Braddock Hickman's advice that corporate bonds were typically undervalued in the market at or near the date of default. The 1970s saw a shift in corporate power from sales and marketing to finance and accounting, which served to reinforce the greater power and status of the bankers and financiers in most investment banking firms. The corporate finance professionals were especially envious of the profitability of everaged buyout (LBO) partnerships and wanted to participate.
