Stewart Myers

Last updated
Stewart Myers
Born (1940-08-01) August 1, 1940 (age 78)
NationalityAmerican
Academic background
Alma mater Williams College
Stanford University
Academic work
DisciplineEconomics
Sub-disciplineFinancial Economics
InstitutionsMIT Sloan School of Management

Stewart Clay Myers (born August 1, 1940) is the Robert C. Merton (1970) Professor of Financial Economics at the MIT Sloan School of Management. [1] He is notable for his work on capital structure and innovations in capital budgeting and valuation, and has had a "remarkable influence" on both the theory and practice of corporate finance. [2] Myers, in fact, coined the term "real option". He is the co-author with Richard A. Brealey and Franklin Allen of Principles of Corporate Finance , a widely used and cited business school textbook, now in its 11th edition. He is also the author of dozens of research articles. [3]

Robert C. Merton American economist

Robert Cox Merton is an American economist, Nobel Memorial Prize in Economic Sciences laureate, and professor at the MIT Sloan School of Management, known for his pioneering contributions to continuous-time finance, especially the first continuous-time option pricing model, the Black–Scholes formula. In 1993 Merton co-founded hedge fund Long-Term Capital Management. In 1997 he received the Nobel Prize for his contributions in Economics.

MIT Sloan School of Management business school of the Massachusetts Institute of Technology

The MIT Sloan School of Management is the business school of the Massachusetts Institute of Technology, in Cambridge, Massachusetts, United States. MIT Sloan offers bachelor's, master's, and doctoral degree programs, as well as executive education. Its MBA program is among the most selective in the world, and it is ranked #1 in more disciplines than any other business school. MIT Sloan emphasizes innovation in practice and research. Many influential ideas in management and finance originated at the school, including the Black–Scholes model, the Solow–Swan model, the random walk hypothesis, the binomial options pricing model, and the field of system dynamics. The faculty has included numerous Nobel laureates in economics and John Bates Clark Medal winners.

Capital budgeting includes all methods that allow a rational assessment of the calculable aspects of an investment

Capital budgeting, and investment appraisal, is the planning process used to determine whether an organization's long term investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structure. It is the process of allocating resources for major capital, or investment, expenditures. One of the primary goals of capital budgeting investments is to increase the value of the firm to the shareholders.

Contents

Career

He holds a Ph.D. and MBA from Stanford University and an A.B. from Williams College. [4] He began teaching at MIT Sloan School of Management in 1966. [5]

Stanford University private research university located in Stanford, California, United States

Leland Stanford Junior University is an American private research university in Stanford, California. Stanford is known for its academic strength, wealth, proximity to Silicon Valley, and ranking as one of the world's top universities.

Williams College liberal arts college in Massachusetts

Williams College is a private liberal arts college in Williamstown, Massachusetts, United States. It was established in 1793 with funds from the estate of Ephraim Williams, a colonist from the Province of Massachusetts Bay who was killed in the French and Indian War in 1755. The college was ranked first in 2017 in the U.S. News & World Report's liberal arts ranking for the 15th consecutive year, and first among liberal arts colleges in the 2018 Forbes magazine ranking of America's Top Colleges.

His contributions are seen as falling into three main categories: [6]

Capital structure

In finance, particularly corporate finance capital structure is the way a corporation finances its assets through some combination of equity, debt, or hybrid securities.

The APV was introduced by the italian mathematician Lorenzo Peccati, Professor at the Bocconi University. The method is to calculate the NPV of the project as if it is all-equity financed. Then the base-case NPV is adjusted for the benefits of financing. Usually, the main benefit is a tax shield resulted from tax deductibility of interest payments. Another benefit can be a subsidized borrowing at sub-market rates. The APV method is especially effective when a leveraged buyout case is considered since the company is loaded with an extreme amount of debt, so the tax shield is substantial.

Recent projects include the valuation of investments in R&D, risk management, and the allocation of capital in diversified firms, and the theory of corporate governance.

He is currently a principal of economic consulting firm The Brattle Group. [7] He is a past president of the American Finance Association, [8] a research associate of the National Bureau of Economic Research, [9] and a director of the Cambridge Endowment for Research in Finance.

The American Finance Association (AFA) is an academic organization whose focus is the study and promotion of knowledge of financial economics. It was formed in 1939. Its main publication, the Journal of Finance, was first published in 1946.

National Bureau of Economic Research American private nonprofit research organization

The National Bureau of Economic Research (NBER) is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community." The NBER is well known for providing start and end dates for recessions in the United States.

Works

International Standard Book Number Unique numeric book identifier

The International Standard Book Number (ISBN) is a numeric commercial book identifier which is intended to be unique. Publishers purchase ISBNs from an affiliate of the International ISBN Agency.

Related Research Articles

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.

Stephen Alan "Steve" Ross was the inaugural Franco Modigliani Professor of Financial Economics at the MIT Sloan School of Management after a long career as the Sterling Professor of Economics and Finance at the Yale School of Management. He is known for initiating several important theories and models in financial economics. He is a widely published author in finance and economics, and is coauthor of one of the best-selling Corporate Finance texts.

Thomas W. Malone American business theorist

Thomas W. Malone is an American organizational theorist, management consultant, and the Patrick J. McGovern Professor of Management at the MIT Sloan School of Management.

Financial modeling is the task of building an abstract representation of a real world financial situation. This is a mathematical model designed to represent the performance of a financial asset or portfolio of a business, project, or any other investment.

Frank J. Fabozzi is an American economist, educator, writer, and investor, currently Professor of Finance at EDHEC Business School and a Member of Presentation Edhec Risk Institute. He was previously a Professor in the Practice of Finance and Becton Fellow in the Yale School of Management. He is well known as the author of numerous books on finance, both practitioner-focused and academic. He has been the editor of the Journal of Portfolio Management since 1986 and is on the board of directors of the BlackRock complex of closed-end funds.

In corporate finance, the pecking order theory postulates that the cost of financing increases with asymmetric information.

Invested capital represents the total cash investment that shareholders and debtholders have made in a company. There are two different but completely equivalent methods for calculating invested capital. The operating approach is calculated as:

A masters degree in quantitative finance concerns the application of mathematical methods to the solution of problems in financial economics. There are several like-titled degrees which may further focus on financial engineering, financial risk management, computational finance and/or mathematical finance.

Richard A. Brealey is a British economist and author. He is an Emeritus Professor at the London Business School and a Fellow of the British Academy. He is widely known for his Principles of Corporate Finance, coauthored with Stewart C. Myers and Franklin Allen, a text that "has earned tremendous loyalty as both a classroom tool and a professional reference work".

Jonathan Edwards "Jon" Ingersoll, Jr. is an American economist. He is the Adrian C. Israel Professor of International Trade and Finance at Yale School of Management. Prior to coming to Yale he was on the faculty at the Graduate School of Business at the University of Chicago.

Marti G. Subrahmanyam is the Charles E. Merrill Professor of Finance at the Stern School of Business at New York University. He also teaches for the Master of Science in Global Finance (MSGF), which is a joint program between Stern and the Hong Kong University of Science and Technology. Professor Subrahmanyam is best known for his research in the areas of corporate finance, capital markets and international 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.

Timothy A. Luehrman is a finance academic at Harvard Business School. He is best known for his work on valuation and real options; specifically, he conceived the idea of treating business strategy as a series of options, and his papers here are widely quoted.

Otto Scharmer economist

Claus Otto Scharmer is a Senior Lecturer at Massachusetts Institute of Technology (MIT), a Thousand Talents Program Professor at Tsinghua University, Beijing, and co-founder of the Presencing Institute. He chairs the MIT IDEAS program for cross-sector innovation that aims to help "stakeholders from business, government, civil society to innovate at the level of the whole system".

Corporate finance area of finance dealing with the sources of funding and the capital structure of corporations

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.

Robert Stephen Pindyck is an American economist, Bank of Tokyo-Mitsubishi Professor of Economics and Finance at Sloan School of Management at Massachusetts Institute of Technology. He is also a research associate with the National Bureau of Economic Research and a Fellow of the Econometric Society. He has also been a Visiting Professor at Tel-Aviv University, Harvard University, and Columbia University.

<i>Principles of Corporate Finance</i> book by Richard A. Brealey

Principles of Corporate Finance is a reference work on the corporate finance theory edited by Richard Brealey, Stewart Myers, and Franklin Allen. The book is one of the leading texts that describes the theory and practice of corporate finance. It was initially published in October 1980 and now is available in its 12th edition. Principles of Corporate Finance has earned loyalty both as a classroom tool and as a professional reference book.

References