Perfect Capital Markets Modigliani and Miller Finance Essay
Abstract. One of the two most important theories of capital costs and capital structure is the theory of Nobel Prize winners Modigliani and Miller Am Econ 261-297, 1958, Am Econ 147-175. 3 · Miller theory without taxes. Modigliani and Miller ММ reached conclusions in their first article that were fundamentally different from the conclusions of the traditional approach. Under assumptions see Sect. 2. details that there are no taxes, no transaction fees, no bankruptcy fees. The theory that in a perfect capital market the value of a company is independent of the financing method used. Capital can be raised by borrowing, issuing shares or retaining profits instead of paying dividends. The Modigliani-Miller theorem states that in a perfect capital market it does not matter for a company whether it uses debt or.