|Born||16 May 1923|
|Died|| 3 June 2000 77) (aged|
Chicago, Illinois, USA
|Institution|| Carnegie Mellon University |
University of Chicago
London School of Economics
|Chicago School of Economics|
|Alma mater|| Johns Hopkins University, (Ph.D.)|
Harvard University, (M.A.)
| Eugene Fama |
|Awards||Nobel Memorial Prize in Economic Sciences (1990)|
|Information at IDEAS / RePEc|
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. Miller spent most of his academic career at the University of Chicago's Booth School of Business.
The Modigliani–Miller theorem is an influential element of economic theory; it forms the basis for modern thinking on capital structure. The basic theorem states that in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed. Since the value of the firm depends neither on its dividend policy nor its decision to raise capital by issuing stock or selling debt, the Modigliani–Miller theorem is often called the capital structure irrelevance principle.
The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics, is an award for outstanding contributions to the field of economics, and generally regarded as the most prestigious award for that field. The award's official name is The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
Harry Max Markowitz is an American economist, and a recipient of the 1989 John von Neumann Theory Prize and the 1990 Nobel Memorial Prize in Economic Sciences.
Miller was born in Boston, Massachusetts to Jewish parents Sylvia and Joel Miller,a housewife and attorney. He worked during World War II as an economist in the division of tax research of the Treasury Department, and received a Ph.D. in economics from Johns Hopkins University, 1952. His first academic appointment after receiving his doctorate was Visiting Assistant Lecturer at the London School of Economics.
World War II, also known as the Second World War, was a global war that lasted from 1939 to 1945. The vast majority of the world's countries—including all the great powers—eventually formed two opposing military alliances: the Allies and the Axis. A state of total war emerged, directly involving more than 100 million people from over 30 countries. The major participants threw their entire economic, industrial, and scientific capabilities behind the war effort, blurring the distinction between civilian and military resources. World War II was the deadliest conflict in human history, marked by 50 to 85 million fatalities, most of whom were civilians in the Soviet Union and China. It included massacres, the genocide of the Holocaust, strategic bombing, premeditated death from starvation and disease, and the only use of nuclear weapons in war.
A Doctor of Philosophy is the highest university degree that is conferred after a course of study by universities in most English-speaking countries. PhDs are awarded for programs across the whole breadth of academic fields. As an earned research degree, those studying for a PhD are usually required to produce original research that expands the boundaries of knowledge, normally in the form of a thesis or dissertation, and defend their work against experts in the field. The completion of a PhD is often a requirement for employment as a university professor, researcher, or scientist in many fields. Individuals who have earned a Doctor of Philosophy degree may, in many jurisdictions, use the title Doctor or, in non-English-speaking countries, variants such as "Dr. phil." with their name, although the proper etiquette associated with this usage may also be subject to the professional ethics of their own scholarly field, culture, or society. Those who teach at universities or work in academic, educational, or research fields are usually addressed by this title "professionally and socially in a salutation or conversation." Alternatively, holders may use post-nominal letters such as "Ph.D.", "PhD", or "DPhil". It is, however, considered incorrect to use both the title and post-nominals at the same time.
Johns Hopkins University is a private research university in Baltimore, Maryland. Founded in 1876, the university was named for its first benefactor, the American entrepreneur, abolitionist, and philanthropist Johns Hopkins. His $7 million bequest —of which half financed the establishment of Johns Hopkins Hospital—was the largest philanthropic gift in the history of the United States up to that time. Daniel Coit Gilman, who was inaugurated as the institution's first president on February 22, 1876, led the university to revolutionize higher education in the U.S. by integrating teaching and research. Adopting the concept of a graduate school from Germany's ancient Heidelberg University, Johns Hopkins University is considered the first research university in the United States. Over the course of several decades, the university has led all U.S. universities in annual research and development expenditures. In fiscal year 2016, Johns Hopkins spent nearly $2.5 billion on research.
In 1958, at Carnegie Institute of Technology (now Carnegie Mellon University), he collaborated with his colleague Franco Modigliani on the paper The Cost of Capital, Corporate Finance and the Theory of Investment. This paper urged a fundamental objection to the traditional view of corporate finance, according to which a corporation can reduce its cost of capital by finding the right debt-to-equity ratio. According to the Modigliani–Miller theorem, on the other hand, there is no right ratio, so corporate managers should seek to minimize tax liability and maximize corporate net wealth, letting the debt ratio chips fall where they will.
Carnegie Mellon University (CMU) is a private research university based in Pittsburgh, Pennsylvania. Founded in 1900 by Andrew Carnegie as the Carnegie Technical Schools, the university became the Carnegie Institute of Technology in 1912 and began granting four-year degrees. In 1967, the Carnegie Institute of Technology merged with the Mellon Institute of Industrial Research to form Carnegie Mellon University. With its main campus located 3 miles (5 km) from Downtown Pittsburgh, Carnegie Mellon has grown into an international university with over a dozen degree-granting locations in six continents, including campuses in Qatar and Silicon Valley, and more than 20 research partnerships.
Franco Modigliani was an Italian-American economist and the recipient of the 1985 Nobel Memorial Prize in Economics. He was a professor at UIUC, Carnegie Mellon University, and MIT.
Corporate finance is an area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. The primary goal of corporate finance is to maximize or increase shareholder value. Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms.
The way in which they arrived at this conclusion made use of the "no arbitrage" argument, i.e. the premise that any state of affairs that will allow traders of any market instrument to create a riskless money machine will almost immediately disappear. They set the pattern for many arguments based on that premise in subsequent years.
In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit after transaction costs. For example, an arbitrage opportunity is present when there is the opportunity to instantaneously buy something for a low price and sell it for a higher price.
A premise or premiss is a statement that an argument claims will induce or justify a conclusion. In other words, a premise is an assumption that something is true.
Miller wrote or co-authored eight books. He became a fellow of the Econometric Society in 1975 and was president of the American Finance Association in 1976. He was on the faculty of the University of Chicago's Booth School of Business from 1961 until his retirement in 1993, although he continued teaching at the school for several more years.
The University of Chicago is a private research university in Chicago, Illinois. Founded in 1890 by John D. Rockefeller, the school is located on a 217-acre campus in Chicago's Hyde Park neighborhood, near Lake Michigan. The University of Chicago holds top-ten positions in various national and international rankings.
His works formed the basis of the "Modigliani-Miller Financial Theory".
He served as a public director on the Chicago Board of Trade 1983–85 and the Chicago Mercantile Exchange from 1990 until his death in Chicago on June 3, 2000. In 1993, Miller waded into the controversy surrounding $2 billion in trading losses by what was characterized as a rogue futures trader at a subsidiary of Metallgesellschaft, arguing in the Wall Street Journal that management of the subsidiary was to blame for panicking and liquidating the position too early.In 1995, Miller was engaged by Nasdaq to rebut allegations of price fixing.
The Chicago Board of Trade (CBOT), established on April 3, 1848, is one of the world's oldest futures and options exchanges. More than 50 different options and futures contracts are traded by over 3,600 CBOT members through open outcry and electronic trading. Volumes at the exchange in 2003 were a record breaking 454 million contracts. On July 12, 2007, the CBOT merged with the Chicago Mercantile Exchange (CME) to form the CME Group. CBOT and three other exchanges now operate as designated contract markets (DCM) of the CME Group.
The Chicago Mercantile Exchange (CME) is a global financial and commodity derivative exchange based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an agricultural commodities exchange. Originally, the exchange was a non-profit organization. The Merc demutualized in November 2000, went public in December 2002, and merged with the Chicago Board of Trade in July 2007 to become a designated contract market of the CME Group Inc., which operates both markets. The Chairman and Chief Executive Officer of CME Group is Terrence A. Duffy, Bryan Durkin is President. On August 18, 2008, shareholders approved a merger with the New York Mercantile Exchange (NYMEX) and COMEX. The Merc, CBOT, NYMEX, COMEX and NEX Group are now markets owned by the CME Group.
Metallgesellschaft AG was formerly one of Germany's largest industrial conglomerates based in Frankfurt. It had over 20,000 employees and revenues in excess of 10 billion US dollars. It had over 250 subsidiaries specializing in mining, specialty chemicals (Chemetall), commodity trading, financial services, and engineering (Lurgi). Henry Merton & Company, Ltd was previously a branch of the Metallgesellschaft.
Miller was married to Eleanor Miller, who died in 1969. He was survived by his second wife, Katherine Miller, and by three children from his first marriage: Pamela (1952), Margot (1955), and Louise (1958), and two grandsons.
Financial economics is the branch of economics characterized by a "concentration on monetary activities", in which "money of one type or another is likely to appear on both sides of a trade". Its concern is thus the interrelation of financial variables, such as prices, interest rates and shares, as opposed to those concerning the real economy. It has two main areas of focus: asset pricing and corporate finance; the first being the perspective of providers of capital, i.e. investors, and the second of users of capital.
Robert Emerson Lucas Jr. is an American economist at the University of Chicago, where he is currently the John Dewey Distinguished Service Professor Emeritus in Economics and the College. Widely regarded as the central figure in the development of the new classical approach to macroeconomics, he received the Nobel Prize in Economics in 1995 "for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy". He has been characterized by N. Gregory Mankiw as "the most influential macroeconomist of the last quarter of the 20th century."
Fischer Sheffey Black was an American economist, best known as one of the authors of the famous Black–Scholes equation.
Myron Samuel Scholes is a Canadian-American financial economist. Scholes is the Frank E. Buck Professor of Finance, Emeritus, at the Stanford Graduate School of Business, Nobel Laureate in Economic Sciences, and co-originator of the Black–Scholes options pricing model. Scholes is currently the chairman of the Board of Economic Advisers of Stamos Capital Partners. Previously he served as the chairman of Platinum Grove Asset Management and on the Dimensional Fund Advisors board of directors, American Century Mutual Fund board of directors and the Cutwater Advisory Board. He was a principal and limited partner at Long-Term Capital Management, L.P. and a managing director at Salomon Brothers. Other positions Scholes held include the Edward Eagle Brown Professor of Finance at the University of Chicago, senior research fellow at the Hoover Institution, director of the Center for Research in Security Prices, and professor of finance at MIT’s Sloan School of Management. Scholes earned his PhD at the University of Chicago.
William Forsyth Sharpe is an American economist. He is the STANCO 25 Professor of Finance, Emeritus at Stanford University's Graduate School of Business, and the winner of the 1990 Nobel Memorial Prize in Economic Sciences.
A quantitative analyst is a person who specializes in the application of mathematical and statistical methods to financial and risk management problems. The occupation is similar to those in industrial mathematics in other industries.
In economics, the Fisher separation theorem asserts that the primary objective of a corporation will be the maximization of its present value, regardless of the preferences of its shareholders. The theorem therefore separates management's "productive opportunities" from the entrepreneur's "market opportunities". It was proposed by—and is named after—the economist Irving Fisher.
In finance, particularly corporate finance capital structure is the way a corporation finances its assets through some combination of equity, debt, or hybrid securities.
John Burr Williams was an American economist, recognized as an important figure in the field of fundamental analysis, and for his analysis of stock prices as reflecting their "intrinsic value." He is best known for his 1938 text The Theory of Investment Value, based on his Ph.D. thesis, in which he articulated the theory of discounted cash flow (DCF) based valuation, and in particular, dividend based valuation.
Lars Peter Hansen is an American economist. He is the David Rockefeller Distinguished Service Professor of economics at the University of Chicago and a 2013 recipient of the Nobel Memorial Prize in Economics.
The following outline is provided as an overview of and topical guide to finance:
Jack Lawrence Treynor was an American economist who served as the President of Treynor Capital Management in Palos Verdes Estates, California. He was a Senior Editor and Advisory Board member of the Journal of Investment Management, and was a Senior Fellow of the Institute for Quantitative Research in Finance. He served for many years as the editor of the CFA Institute's Financial Analysts Journal.
The Deutsche Bank Prize in Financial Economics honors renowned researchers who have made influential contributions to the fields of finance and money and macroeconomics, and whose work has led to practical and policy-relevant results. It is awarded biannually, since 2005, by the Center for Financial Studies (CFS), in partnership with Goethe University Frankfurt, and is sponsored by Deutsche Bank Donation Fund. The award carries an endowment of €50,000, which is donated by the Stiftungsfonds Deutsche Bank im Stifterverband für die Deutsche Wissenschaft.
Financial innovation is the act of creating new financial instruments as well as new financial technologies, institutions, and markets. Recent financial innovations include hedge funds, private equity, weather derivatives, retail-structured products, exchange-traded funds, multi-family offices, and Islamic bonds (Sukuk). The shadow banking system has spawned an array of financial innovations including mortgage-backed securities products and collateralized debt obligations (CDOs).
The Tepper School of Business is the business school of Carnegie Mellon University. It is located in the university’s 140-acre (0.57 km2) campus in Pittsburgh, Pennsylvania, US.
Mathematical finance, also known as quantitative finance, is a field of applied mathematics, concerned with mathematical modeling of financial markets. Generally, mathematical finance will derive and extend the mathematical or numerical models without necessarily establishing a link to financial theory, taking observed market prices as input. Mathematical consistency is required, not compatibility with economic theory. Thus, for example, while a financial economist might study the structural reasons why a company may have a certain share price, a financial mathematician may take the share price as a given, and attempt to use stochastic calculus to obtain the corresponding value of derivatives of the stock. The fundamental theorem of arbitrage-free pricing is one of the key theorems in mathematical finance, while the Black–Scholes equation and formula are amongst the key results.
The term shareholder yield captures the three ways in which the management of a public company can distribute cash to shareholders: cash dividends, stock repurchases and debt reduction.
|Wikiquote has quotations related to: Merton Miller|
| Laureate of the Nobel Memorial Prize in Economics |
Served alongside: Harry M. Markowitz, William F. Sharpe
Ronald H. Coase