Corporate Finance and the Legacy of Miller and Modigliani
- (pp. 135-147)
Abstract[This is a comment on "The Modigliani-Miller Propositions after Thirty Years" by Merton H. Miller in this same issue.] The influence of the Modigliani-Miller (1958) propositions on capital structure and the Miller-Modigliani (1961) theses on dividend policy permeates almost all aspects of financial economics to this day. In this commentary, I shall focus on the influence of Miller's and Modigliani's contributions on a couple of key areas in corporation finance, and review research progress by later contributors. Broadly speaking, these two themes can be summarized as: (A) integrated tax- and information-related considerations in capital structure and dividend policy choices; and (B) the impact of inflation and nominally denominated debt contracts on the valuation of corporate equity.
Citation1988. "Corporate Finance and the Legacy of Miller and Modigliani." Journal of Economic Perspectives, 2(4): 135-147. DOI: 10.1257/jep.2.4.135
- 521 Business Finance