Generalized Modigliani-Miller Theory: Applications in Corporate Finance, Investments, Taxation and Ratings

The original theory of capital cost and capital structure was modified by Modigliani and Miller, and this book discusses the general theory of capital cost and capital structure (BFO) theory, which generalizes the Modigliani-Miller theory to encompass companies of an arbitrary age and lifetime. It also investigates the applications of these results in corporate finance, investments, taxation, and ratings.

Format: Paperback / softback
Length: 362 pages
Publication date: 30 March 2023
Publisher: Springer Nature Switzerland AG

The original theory of capital cost and capital structure, developed by Nobel Prize Winners Modigliani and Miller, has undergone numerous modifications and expansions by numerous authors. This book explores some of these revisions. The authors of this book have introduced a comprehensive theory of capital cost and capital structure, known as the Brusov-Filatova-Orekhova (BFO) theory. This theory extends the Modigliani-Miller theory to encompass companies of any age and lifetime, providing a more generalized framework.

Despite the availability of this more comprehensive theory, the classical Modigliani-Miller theory remains widely employed in practice. In this book, the authors for the first time generalize the Modigliani-Miller theory to address practical scenarios, including variable profit, advance tax-on-profit payments, interest on debt payments, multiple tax-on-profit and interest on debt payments per period, and their combination. These generalizations yield valuable theoretical insights and significantly broaden the practical application of this theory. Moreover, the book delves into the applications of these results in corporate finance, investments, taxation, and ratings, where utilizing a generalized Modigliani-Miller theory can be highly fruitful.

Weight: 587g
Dimension: 235 x 155 (mm)
ISBN-13: 9783030938956
Edition number: 1st ed. 2022