La huella indeleble de Modigliani y MillerMM (1958-2008)

  1. Azofra Palenzuela, Valentín
  2. Fuente Herrero, Gabriel de la
Journal:
Boletín de estudios económicos

ISSN: 0006-6249

Year of publication: 2008

Issue Title: Algunas reflexiones sobre recientes normativas y su impacto en la actividad empresarial

Volume: 63

Issue: 194

Pages: 373-401

Type: Article

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More publications in: Boletín de estudios económicos

Abstract

The publication of Franco Modigliani and Merton Miller's article "The Cost of Capital, Corporation Finance and the Theory of Investment" in the American Economic Review in June 1958, changed the rules of the academic debate and paved the way for the flow of Corporate Finance to follow. Since that moment, finance has been seen through the eyes of Mogiliani and Miller. Like a veritable river, its waters have not ceased to flow. Its volume of knowledge has grown spectacularly. Fifty years on nothing is the same: Panta rhei. Only Modigliani and Miller's legacy remains immanent in the stream of finance. Market value is the only relevant issue, financing and dividend decisions are irrelevant. Maximizing market value transforms subjective perceptions of different individuals into an objective fact, the subjective criteria of an investor considered as an individual is subsumed in the objective and impersonal principle, expressed in the equilibrium value. The absence of arbitrage does not require the economy to be in equilibrium, whereas a competitive equilibrium is invariably arbitrage free.

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