Merton Miller
Merton Miller was an American economist, teacher, and creator. Known for the development of the Modigliani-Miller theorem, he was awarded the Nobel Prize in economics in 1990 for his contributions to the field of corporate finance.
Miller is the writer of several books including, Merton Miller on Derivatives and Financial Innovations and Market Volatility. Merton Miller passed on June 3, 2000.
Early Life and Education
Merton Miller was brought into the world in Boston, Massachusetts on May 16, 1923. He graduated with a four year certification from Harvard University in 1944 and earned a Ph.D. in 1952 from Johns Hopkins University. During World War II, Miller functioned as an economist for the federal government in the Division of Tax Research of the U.S. Treasury Department and in this way in the Division of Research and Statistics of the Board of Governors of the Federal Reserve System (FRS).
Miller started a long career in scholarly community as a visitor speaker at the London School of Economics before getting a post at Carnegie Mellon's Graduate School of Industrial Administration. In 1961, Miller joined the staff at the University of Chicago where he remained until the end of his career.
Modigliani-Miller Theorem
All through his career, Miller's research centered around corporate finance and the economic and regulatory issues of the financial services industry.
While a teacher at Carnegie Mellon's graduate school, Miller met economist and MIT graduate, Franco Modigliani. The team worked together and distributed the first of their joint "M&M" papers on corporate finance in 1958. "The Cost of Capital, Corporate Finance and the Theory of Investment" would be the basis of the Modigliani-Miller theorem. The theorem later appeared in the papers and compositions of the two men and was explained upon by others too. At that point, Carnegie-Mellon was respected for its educational plan in behavioral economics, and Miller and Modigliani embraced the critical thinking approach supported at the University.
The Modigliani-Miller Theorem, distributed in 1958, makes sense of that the mix of equity and debt used to finance a company is irrelevant to the association's value. Merton Miller broadly equated his theory to a joke told by baseball catcher Yogi Berra. Berra once let his coach know that he was especially eager, and he trained him to cut his pizza into 12 pieces rather than six. The jest delineates the commended theorem about a company's capital structure that Miller conceived with Modigliani. A company's value is independent of the way things are financed, similar as the size of a pizza is independent of how you cut it.
Striking Accomplishments
Merton Miller was awarded the Nobel Prize in economics in 1990 for his spearheading work in the theory of financial economics and his contribution to the Modigliani-Miller Theorem.
All through his career and into retirement, Miller kept on being engaged with the study and verbalization of issues inside corporate finance. He filled in as a public director on the Chicago Board of Trade and the Chicago Mercantile Exchange. In 1995, he was retained as a consultant by the NASDAQ to research issues of cost fixing on the exchange.
The Bottom Line
Merton Miller is associated with his fundamental contributions to the theory of corporate finance. The development of the Modigliani-Miller theorem affected the further study of the valuation of corporations. Miller's publications and texts are still widely utilized in scholarly community today.
Features
- Merton Miller developed the Modigliani-Miller theorem with individual economist Franco Modigliani.
- He was awarded the Nobel Prize in economics in 1990.
- Miller was a teacher of economics at the Carnegie Mellon Graduate School of Industrial Administration and the University of Chicago.
FAQ
How Has Merton Miller Influenced Corporate Dividend Policy?
Miller and Modigliani's 1961 paper, "Dividend Policy, Growth, and the Valuation of Shares," contends that investors don't pay regard for the dividend history of a company, in this way exhibiting the irrelevance of dividend policy to company value.
How Has Merton Miller's Books Influenced College Students?
His reading material, Macroeconomics: A Neoclassical Introduction, co-created with Charles Upton, is widely utilized in business educational programs and universities.
Who Influenced Merton Miller?
Merton Miller believed himself to be an activist ally of unregulated economy answers for economic issues and was impacted by Milton Friedman, Theodore Schultz, and George Stigler.
