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The Modigliani–Miller theorem (of Franco Modigliani, Merton Miller) is an influential element of economic theory; it forms the basis for modern thinking on capital structure. [1] The basic theorem states that in the absence of taxes , bankruptcy costs, agency costs , and asymmetric information , and in an efficient market , the enterprise ...
Merton Howard Miller (May 16, 1923 – June 3, 2000) was an American economist, and the co-author of the Modigliani–Miller theorem (1958), which proposed the irrelevance of debt-equity structure. He shared the Nobel Memorial Prize in Economic Sciences in 1990, along with Harry Markowitz and William F. Sharpe .
What is puzzling, however, is that it should not matter to investors whether a firm pays dividends or not: [2] as an owner of the firm, the investor should be indifferent as to receiving dividends or having these re-invested in the business; see Modigliani–Miller theorem.
The rational expectations hypothesis is considered by economists [11] to originate in the [12] paper written by Modigliani and Emile Grunberg in 1954. [13] [14] When he was a member of the Carnegie Mellon University faculty, he formulated in 1958, along with Merton Miller, the Modigliani–Miller theorem for corporate finance.
One of Treynor's Chicago-trained ADL colleagues, Stephen Sobotka, sent the draft to Merton Miller. Miller and Modigliani had co-authored their great 1958 and 1963 papers while Modigliani was teaching at Northwestern University. Now Modigliani was moving to MIT, and he called Treynor and invited him to lunch. Modigliani said it was clear from ...
In corporate finance, the pecking order theory (or pecking order model) postulates that [1] "firms prefer to finance their investments internally, using retained earnings, before turning to external sources of financing such as debt or equity" - i.e. there is a “pecking order” when it comes to financing decisions.
The Wallace neutrality [1] (also known as Wallace Irrelevance Proposition, [2] [3] Modigliani–Miller theorem for government finance [4]), is an economics proposition asserting that in certain environment, holding fiscal policy constant, alternative paths of the government financial policies have no effect on the sequences for the price level and for real allocations in the economy.
Other early appointees were Abraham Charnes, Richard Cyert, James G. March, Franco Modigliani and Merton Miller. GSIA was set up as a "new look" business school, moving beyond the case-based method of instruction popularized by Harvard Business School, to incorporate scientific methods of management. The economics faculty was folded into the ...