Merton Miller used to be as soon as an American economist, professor, and author. Known for the development of the Modigliani-Miller theorem, he used to be as soon as awarded the Nobel Prize in economics in 1990 for his contributions to the field of corporate finance.
Miller is the author of a variety of books along side, Merton Miller on Derivatives and Financial Innovations and Market Volatility. Merton Miller died on June 3, 2000.
Key Takeaways
- Merton Miller advanced the Modigliani-Miller theorem with fellow economist Franco Modigliani.
- He used to be as soon as awarded the Nobel Prize in economics in 1990.
- Miller used to be as soon as a professor of economics at the Carnegie Mellon Graduate School of Trade Control and the School of Chicago.
Early Life and Training
Merton Miller used to be as soon as born in Boston, Massachusetts on Would perhaps 16, 1923. He graduated with a bachelor’s level from Harvard School in 1944 and earned a Ph.D. in 1952 from Johns Hopkins School. Far and wide Global Battle II, Miller worked as an economist for the federal government inside the Division of Tax Research of the U.S. Treasury Department and because of this truth inside the Division of Research and Statistics of the Board of Governors of the Federal Reserve Instrument (FRS).
Miller began a longer occupation in academia as a customer lecturer at the London School of Economics forward of securing a publish at Carnegie Mellon’s Graduate School of Trade Control. In 1961, Miller joined the varsity at the School of Chicago where he stayed for the remainder of his occupation.
Modigliani-Miller Theorem
Throughout his occupation, Miller’s research inquisitive about corporate finance and the economic and regulatory problems with the financial services business.
While a professor at Carnegie Mellon’s graduate school, Miller met economist and MIT graduate, Franco Modigliani. The workforce collaborated and published the main of their joint “M&M” papers on corporate finance in 1958. “The Worth of Capital, Corporate Finance and the Idea of Investment” would be the basis of the Modigliani-Miller theorem. The concept that later appeared inside the papers and writings of each and every men and used to be as soon as elaborated upon by the use of others as well. At the time, Carnegie-Mellon used to be as soon as appeared for its curriculum in behavioral economics, and Miller and Modigliani embraced the problem-solving method impressed at the School.
The Modigliani-Miller Theorem, published in 1958, explains that the combination of equity and debt used to finance a company is inappropriate to the corporate’s price. Merton Miller famously equated his concept to a comic story knowledgeable by the use of baseball catcher Yogi Berra. Berra once knowledgeable his trainer that he used to be as soon as specifically hungry, and he prompt him to cut his pizza into 12 pieces instead of six. The quip illustrates the celebrated theorem a few corporate’s capital building that Miller devised with Modigliani. An organization’s price is impartial of the best way it is financed, very similar to the size of a pizza is impartial of the best way you slice it.
Notable Accomplishments
Merton Miller used to be as soon as awarded the Nobel Prize in economics in 1990 for his pioneering artwork inside of the primary of financial economics and his contribution to the Modigliani-Miller Theorem.
Throughout his occupation and into retirement, Miller persevered to be involved inside the learn about and articulation of problems inside of corporate finance. He served as a public director on the Chicago Board of Trade and the Chicago Mercantile Industry. In 1995, he used to be as soon as retained as a expert by the use of the NASDAQ to research issues of price-fixing on the alternate.
Who Influenced Merton Miller?
Merton Miller regarded as himself to be an activist supporter of free-market solutions to monetary problems and used to be as soon as influenced by the use of Milton Friedman, Theodore Schultz, and George Stigler.
How Has Merton Miller Influenced Corporate Dividend Protection?
Miller and Modigliani’s 1961 paper, “Dividend Policy, Growth, and the Valuation of Shares,” argues that customers do not pay attention to the dividend history of a company, thus demonstrating the irrelevance of dividend protection to company price.
How Has Merton Miller’s Books Influenced School Students?
His textbook, Macroeconomics: A Neoclassical Introduction, co-authored with Charles Upton, is extensively used in business curricula and universities.
The Bottom Line
Merton Miller is remembered for his elementary contributions to the theory of corporate finance. The development of the Modigliani-Miller theorem influenced the extra learn about of the valuation of corporations. Miller’s publications and texts are nevertheless extensively used in academia in recent years.
