The Cost of Capital, Corporation Finance and the Theory of Investment.¶
Modigliani, F., & Miller, M. H. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. American Economic Review, 48(3), 261-297.
Cited by¶
4 citations across 4 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Discounting (Present Value)
- Frictionless Benchmark Reasoning
- Corporate finance: Modigliani–Miller — firm value is leverage-invariant in frictionless markets; the real-world programme is the named-friction catalog of taxes, distress costs, agency costs, and signalling under asymmetric information.
This sourceProves capital-structure irrelevance in frictionless markets — the benchmark against which taxes, distress, agency, and signalling are catalogued.
- Corporate finance: Modigliani–Miller — firm value is leverage-invariant in frictionless markets; the real-world programme is the named-friction catalog of taxes, distress costs, agency costs, and signalling under asymmetric information.
- Liquidity
- Liquidity is the variable that captures, in a single dimension, the deviation of any real conversion process from the frictionless ideal.
This sourceFoundational capital-structure invariance result: under frictionless conditions, firm value is independent of financing mix. Provides the theoretical baseline against which liquidity (and other frictions) are measured as deviations from the frictionless ideal.
- Liquidity is the variable that captures, in a single dimension, the deviation of any real conversion process from the frictionless ideal.
- Zero-Force Null Baseline
- In corporate finance, the Modigliani-Miller theorem (no taxes, bankruptcy costs, asymmetric information, or agency costs) establishes capital-structure irrelevance, and the entire taxonomy of capital-structure theories is structured as MM-deviation analysis.
This sourceEstablishes capital-structure irrelevance under no taxes, bankruptcy costs, asymmetric information, or agency costs — the corporate-finance zero-force baseline.
- In corporate finance, the Modigliani-Miller theorem (no taxes, bankruptcy costs, asymmetric information, or agency costs) establishes capital-structure irrelevance, and the entire taxonomy of capital-structure theories is structured as MM-deviation analysis.
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