This dissertation develops two examples in which managerial actions affect profitability. This view stands in contrast to earlier assumptions in economic theory that take a firm's profitability as given. The first example discusses how firm value depends on management's relative bargaining strength vis-a-vis an external party for a joint project. This example characterizes bargaining strength of the firm and of the outside party by means of specific criteria, such as capital participation restriction rules and the allocation of effective control of the project. The second example explores the effects on a firm's value, and on its capital structure, of the existence of managerial private benefits. Decision on financial structure is therefore considered to be affected by the kind of agency problem posed by management. In this second example we develop a system for the design of securities, given the effects of managerial actions on the characteristics of the cash flow distributions.