Disproving the MM Theorem
7 Pages Posted: 1 Jun 2016 Last revised: 11 Aug 2022
Date Written: May 29, 2016
Abstract
Franco Modigliani and Merton Miller claimed that a firm is indifferent between borrowing and equity financing, and between capital structure and market value. This paper makes use of their other measure to tell exactly when a firm should borrow and when it should issue shares. No more ambiguity.
Keywords: Corporate Finance
JEL Classification: G32
Suggested Citation: Suggested Citation
Choi, Hak, Disproving the MM Theorem (May 29, 2016). Available at SSRN: https://ssrn.com/abstract=2786431 or http://dx.doi.org/10.2139/ssrn.2786431
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