in a much referenced passage pointe

in a much referenced passage pointed out
that a set of efficient institutional arrangements would require that bondholders
be paid before stockholders, that lower priority bonds be retired before higher
priority bonds, and that part of a bond issue not be retired without retiring the
whole issue. These practices have become known as "me-first rules". Fama and
Miller argued that if me-first rules were in effect and firms' investment policies
were fixed, managers would have incentives to act efficiently and to maximize
the value of the firm.