A
financial academic and theoretician. Along with Franco Modigliani, he developed the
Modigliani-Miller theory, which states that if
financial markets are perfectly
efficient, then how a company is a
financed has no bearing on its performance. That is, without taxes, asymmetric information, or government and other unnecessary
fees, a company is equally likely to perform well regardless of whether it is financed by
equity issues,
debt, or something else. It also states that a company's
dividend policy is irrelevant in these circumstances. Miller's theory has been used to justify the increased use of
leverage since the 1980s. He was awarded the Nobel Prize in Economics (along with
Harry Markowitz and
William Sharpe) in 1990 for this and other contributions. Critics contend his theory has led to needless risk-taking. He was born in Boston in 1923 and died in Chicago in 2000.