Here is the synopsis of our sample research paper on Modigliani and Miller. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
A paper which looks at the impact of M-M theories on corporate structure, with regard to debt and equity, and looks at some of the criticisms which have been made of the theories since their publication. Bibliography lists 6 sources
Page Count:
5 pages (~225 words per page)
File: JL5_JLmodmil.rtf
Buy This Term Paper »
Unformatted sample text from the term paper:
the M-M theory appears to rely on simple logic, despite the complexities of the economic and financial issues to which it relates. He uses an example concerning mortgaging a property
to demonstrate that even though there are different methods of financing ones mortgage, this does not in itself change the value of the house. Miller (2004) makes a similar point
with his pizza analogy - no matter how many slices it is cut into, the pizza retains the same total nutritional value. Despite its simplicity, however, as Cohen (2004) notes,
M-M theories have had a significant impact on capital structuring, where debt and equity are concerned.
Gifford (2004) summarises M-M theories as stating that there is no point in trying to increase shareholders returns by
adjusting levels of debt, because this will not be successful: instead, the optimum capital structure for a company is that which supports the companys operations and investments. He gives an
example of an investment banker presenting a company with detailed and complicated proposals; the company is confused by the wealth of material offered and has difficulty deciding which of the
"accounting numbers" is relevant. According to M-M, the company should disregard the "numbers" and instead look at the ways in which operating behaviour would be changed by the proposal as
a whole. As Gifford states, part of the
problem which critics see with M-M is that the theories have a somewhat "other worldly" aspect, which he sees as typical of economic model-makers. He points out that M-M assumes
...