/merton-miller_final-efd4279af2ba4b4fab9d464ed177da6b.png "Who Was Merton Miller? What is Corporate Finance? 1")
Merton Miller was an American economist, professor, and writer. Identified for the event of the Modigliani-Miller theorem, he was awarded the Nobel Prize in economics in 1990 for his contributions to the sphere of company finance.
Miller is the writer of a number of books together with, Merton Miller on Derivatives and Monetary Improvements and Market Volatility. Merton Miller died on June 3, 2000.
KEY TAKEAWAYS
- Merton Miller developed the Modigliani-Miller theorem with fellow economist Franco Modigliani.
- He was awarded the Nobel Prize in economics in 1990.
- Miller was a professor of economics on the Carnegie Mellon Graduate Faculty of Industrial Administration and the College of Chicago.
Early Life and Schooling
Merton Miller was born in Boston, Massachusetts on Might 16, 1923. He graduated with a bachelor’s diploma from Harvard College in 1944 and earned a Ph.D. in 1952 from Johns Hopkins College. Throughout World Warfare II, Miller labored as an economist for the federal authorities within the Division of Tax Analysis of the U.S. Treasury Division and subsequently within the Division of Analysis and Statistics of the Board of Governors of the Federal Reserve System (FRS).
Miller started a protracted profession in academia as a visitor lecturer on the London Faculty of Economics earlier than securing a submit at Carnegie Mellon’s Graduate Faculty of Industrial Administration. In 1961, Miller joined the school on the College of Chicago the place he stayed for the rest of his profession.
Modigliani-Miller Theorem
All through his profession, Miller’s analysis centered on company finance and the financial and regulatory issues of the monetary providers trade.
Whereas a professor at Carnegie Mellon’s graduate faculty, Miller met economist and MIT graduate, Franco Modigliani. The crew collaborated and revealed the primary of their joint “M&M” papers on company finance in 1958. “The Price of Capital, Company Finance and the Concept of Funding” could be the premise of the Modigliani-Miller theorem. The theory later appeared within the papers and writings of each males and was elaborated upon by others as properly. On the time, Carnegie-Mellon was regarded for its curriculum in behavioral economics, and Miller and Modigliani embraced the problem-solving method inspired on the College.
The Modigliani-Miller Theorem, revealed in 1958, explains that the combo of fairness and debt used to finance an organization is irrelevant to the agency’s worth. Merton Miller famously equated his idea to a joke advised by baseball catcher Yogi Berra. Berra as soon as advised his coach that he was significantly hungry, and he instructed him to chop his pizza into 12 items as a substitute of six. The quip illustrates the celebrated theorem a couple of agency’s capital construction that Miller devised with Modigliani. A agency’s worth is unbiased of how it’s financed, very like the scale of a pizza is unbiased of the way you slice it.
Notable Accomplishments
Merton Miller was awarded the Nobel Prize in economics in 1990 for his pioneering work within the idea of economic economics and his contribution to the Modigliani-Miller Theorem.
All through his profession and into retirement, Miller continued to be concerned within the research and articulation of issues inside company finance. He served as a public director on the Chicago Board of Commerce and the Chicago Mercantile Alternate. In 1995, he was retained as a guide by the NASDAQ to analysis problems with price-fixing on the change.
Who Influenced Merton Miller?
Merton Miller thought-about himself to be an activist supporter of free-market options to financial issues and was influenced by Milton Friedman, Theodore Schultz, and George Stigler.
How Has Merton Miller Influenced Company Dividend Coverage?
Miller and Modigliani’s 1961 paper, “Dividend Coverage, Progress, and the Valuation of Shares,” argues that traders don’t take note of the dividend historical past of an organization, thus demonstrating the irrelevance of dividend coverage to firm worth.
How Has Merton Miller’s Books Influenced School College students?
His textbook, Macroeconomics: A Neoclassical Introduction, co-authored with Charles Upton, is extensively utilized in enterprise curricula and universities.
The Backside Line
Merton Miller is remembered for his elementary contributions to the speculation of company finance. The event of the Modigliani-Miller theorem influenced the additional research of the valuation of companies. Miller’s publications and texts are nonetheless extensively utilized in academia as we speak.