Merton Howard Miller (
May
16,
1923 –
June 3,
2000) was the co-author of the
Modigliani-Miller Model which
proposed the irrelevance of debt-equity structure. He shared the
Nobel Memorial
Prize in Economic Sciences in 1990, along with
Harry Markowitz and
William Sharpe.
Biography
Early years
Miller was
born in Boston,
Massachusetts
to Joel and Sylvia Miller, an attorney and
housewife. 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
.
Career
In 1958,
at Carnegie Institute
of Technology (now Carnegie Mellon University
), 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, although he continued teaching at the school
for several more years.
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 3,
2000.
Personal life
Miller was married to Eleanor Miller, who died in 1969. He was
survived by his second wife, Katherine Miller, and by three
children from his first marriage and two grandsons. three children
by his first marriage: Pamela (1952), Margot (1955), and Louise
(1958).
Bibliography
See also
References
External links
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