Merton Howard "Mert" Miller (May 16, 1923 –
June 3, 2000) shared the Nobel Prize in Economics in 1990, along with Harry Markowitz and William Sharpe.
He was born in Boston, Massachusetts. 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.
In 1958, at Carnegie Institute of
Technology (now Carnegie-Mellon University) whose Graduate School of Industrial Administration(now Tepper School of Business) was the first and most influential research-oriented U.S. business
schools, he collaborated with his colleague Franco Modigliani there to write a paper
on “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
Miller-Modigliani 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.
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.
Mr. 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 Graduate School of
Business from 1961 until his retirement in 1993.
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 3rd, 2000.
See also
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