The Modigliani-Miller theorem, developed by Franco Modigliani and Merton Miller, is an influential element of economic theory that forms the basis of modern thinking on corporate capital structure. Its basic form states that, in the absence of taxes, bankruptcy costs, agency costs and asymmetric information, and in an efficient market, the enterprise value of a firm is unaffected by how that firm is financed, so the firm's value depends on neither its dividend policy nor its choice between issuing shares and selling debt.
Facts
StatementThe Modigliani-Miller theorem is an influential element of economic theory that forms the basis for modern thinking on capital structure. 1 Classification
Statement FormCharacterization Theorem 1 Connections
Has Statement Form
Entity-backed identity for the statement-form enum value this theorem already carries, resolved to a mathematics concept by an explicit value-to-entity map (phase 3 bucket conversion, docs\design_entity_backed_browse_buckets_20260928.md). The statement-form fact itself stays on the theorem unchanged.
Sources
1. Modigliani-Miller theorem - Wikipedia
Lead paragraph
The Modigliani-Miller theorem (of Franco Modigliani, Merton Miller) is an influential element of economic theory; it forms the basis for modern thinking on capital structure.
Historical background section
The theorem was first proposed by F. Modigliani and M. Miller in 1958.
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