Miller's Theory Research Articles

A Matter of Metals: Finno-Ugric and Northern Iranian

Vsevolod Miller in the third part of his Ossetic Studies considered the names of the metals both in Iron and Digoron, with particular reference to those of Finno-Ugric origin, in order to determine the way followed by the Alans to reach the Northern Caucasus in the first century A.D. In this paper Miller's theory is examined in the light of the historical linguistic data currently available.

Modification of the Modigliani–Miller Theory for the Case of Advance Payments of Tax on Profit

The first serious study (and first quantitative study) of influence of capital structure of the company on its indicators of activities was the work by Nobel Prize Winners Modigliani and Miller. Their theory has a lot of limitations. One of the most important and seriouse assumptions of the Modigliani – Miller theory is that all financial flows as well as all companies are perpetuity. This limitation was lift out by Brusov–Filatova–Orekhova in 2008 (Filatova et al. 2008), who have created BFO theory – modern theory of capital cost and capital structure for companies of arbitrary age. Despite the fact that the Modigliani–Miller theory is currently a particular case of the general theory of capital cost and capital structure – Brusov–Filatova–Orekhova (BFO) theory – it is still widely used at the West. In current paper we discuss one more limitation of Modigliani – Miller theory: a method of tax on profit payments. Modigliani – Miller theory accounts these payments as annuity–immediate while in practice these payments are making in advance and thus should be accounted as annuity–due. We generalize the Modigliani–Miller theory for the case of advance payments of tax on profit, which is widely used in practice, and show that this leads to some important consequencies, which change seriously all the main statements by Modigliani and Miller. These consequencies are as following: WACC starts to depend on debt cost kd, WACC turns out to be lower than in case of Modigliani–Miller theory and thus company capitalization becomes higher than in ordinary Modigliani–Miller theory.We show that dependence of equity cost on leverage level L is still linear, but the tilt angle with respect to L–axis turns out to be smaller: this could lead to modification of the divident policy of the company. Correct account of a method of tax on profit payments demonstrates that shortcomings of Modigliani – Miller theory are dipper, than everybody suggested: the underestimation of WACC really turns out to be bigger, as well as overestimation of the capitalization of the company. This means that systematic risks arising from the use of modified Modigliani – Miller theory (MMM theory) (which is more correct than classical' one) in practice are higher than it was suggested by the classical version of this theory.

The “dividend puzzle” and the Russian stock market. Part 1

This article analyzes the key patterns of the dividend policy and the problem of the “dividend puzzle” in the general context of the development of the stock market in Russia. The article consists of two parts.In the first part we summarize main research trends of dividend policy in modern economic theory (the classical Modigliani—Miller theory of dividend irrelevance, agent and signal hypotheses, the smoothing model, the catering theory, etc.). We emphasize the theoretical analysis of motivation of the largest Russian companies for profit allocation and dividend payout, based on a sample of 236 joint stock companies. Since 2012, a steady increase in dividend payments has been revealed in both private and state-owned enterprises (SOEs). The bulk of dividend payments from SOEs accounts for only 12 major companies. Along with an increase in the market value, dividends have become an important factor in the total return on shares. Under current conditions, the probability of paying dividends depends not only on the size of the company and indicators of its’ financial stability, but also on the presence of the state in the capital of companies. However, the relationship between the probability of paying dividends and state participation in the ownership structure is not universal and can be explained by specific factors that go beyond the classical dividend theories.In the second part we will analyze the patterns of stock market performance and dividend policy of the largest Russian companies, motivation for dividend payouts and special aspects of SOEs policy.

Capital Structure and Firms’ Performance. A Review of Quoted Nigeria Banks

Capital is vital for any business to survive and its composition matters a lot if the business wants to continue in perpetuity. This paper therefore examines capital structure and firms’ performance of quoted banks in Nigeria for the period of 1981-2019. It drew heavily from the Static Trade-Off Theory, Irrelevance and Relevance Theory of Modigliani And Miller and the Pecking Order Theory. Secondary data with respect to return on assets, equity ratio and leverage ratio were obtained from the Nigerian stock exchange reports. The data were subjected to unit root tests using the Augmented Dickey-Fuller test and were found to be stationary at first difference: 1(1). The Johansen Co-integration test conducted showed that the variable under study were co-integrated in order 1(1). The results of the Error Correction Model indicated that the debt ratio has negative and insignificant relationship to the return on assets, while the equity ratio and leverage ratio had significant positive relationship to the return on assets proxy for firms’ performance. Furthermore, a uni-directional causality was identified between equity ratio and return on assets, equity ratio, debt ratio and leverage ratio and return on assets, after employing the Granger Causality tests. The paper therefore recommends that short-term employment of debt finance is needed so as to easily absorb applicable interest charge and reduce corporate task burden. The paper further suggest that financial managers should rely more on internal funds before exploring other external avenues to source for funds.

Analysis of the Influence of Capital Structure and Profit Ability on Corporate Value: Empirical Study with Modigliani and Miller Theory of Investment Review

This study aims to provide empirical evidence of the influence of capital structure and profitability on firm value. The selection of independent variables capital structure and profitability to prove the proposition Modigliani and Miller (1958) which states that the value of the company is not influenced by capital structure, but rather influenced by profitability. The results of this study are expected to provide insight and understanding of capital market behavior in Indonesia, particularly those relating to decision making by investors. The contribution of research results is to the field of accounting especially the subject of financial accounting and the subject of investment and portfolio management is the field of science that gets the most contribution from this research. The results of this study can also be used as learning material for the course concerned. The research method used is descriptive quantitative, using multiple regression analysis, using secondary data from LQ 45 companies listed on the Indonesia Stock Exchange. hypothesis testing does not support the Modigliani and Miller (1958) hypotheses, which maintain market efficiency and symmetrical assumptions of information and state that capital structure will not affect firm value Keywords: capital structure, profitability, company value, LQ 45 DOI : 10.7176/EJBM/12-3-20 Publication date: January 31 st 2020

The Leverage of Growth Firms

Theories on the capital structure of growth firms produce inconsistent and puzzling results. We revisit the Modigliani and Miller (M&M) theory on capital structure and value of tax shields. Using the M&M’s arbitrage pricing arguments, we are able to extend the theory to growth firms and reconcile the theories of capital structure for growth firms with the M&M theory for no-growth firms. We unify the theories and resolve the puzzles raised in the literature.

Endperiodic automorphisms of surfaces and foliations

We extend the unpublished work of Handel and Miller on the classification, up to isotopy, of endperiodic automorphisms of surfaces. We give the Handel–Miller construction of the geodesic laminations, give an axiomatic theory for pseudo-geodesic laminations, show that the geodesic laminations satisfy the axioms, and prove that pseudo-geodesic laminations satisfying our axioms are ambiently isotopic to the geodesic laminations. The axiomatic approach allows us to show that the given endperiodic automorphism is isotopic to a smooth endperiodic automorphism preserving smooth laminations ambiently isotopic to the original ones. Using the axioms, we also prove the ‘transfer theorem’ for foliations of 3-manifolds, namely that, if two depth-one foliations${\mathcal{F}}$and${\mathcal{F}}^{\prime }$are transverse to a common one-dimensional foliation${\mathcal{L}}$whose monodromy on the non-compact leaves of${\mathcal{F}}$exhibits the nice dynamics of Handel–Miller theory, then${\mathcal{L}}$also induces monodromy on the non-compact leaves of${\mathcal{F}}^{\prime }$exhibiting the same nice dynamics. Our theory also applies to surfaces with infinitely many ends.

Nonadiabatic Dynamics of Hydrogen Diffusion on Cu(001): Classical Mapping Model with Multistate Projection Window in Real Space.

Diffusion of atomic hydrogen on metallic surfaces is a longstanding research topic of both fundamental and practical interests. However, full understanding of the microscopic mechanisms and development of effective strategy for surface dynamics control at the molecular level remain elusive. In this paper, we propose a new nonadiabatic multistate model for surface diffusion based on a real space decomposition scheme by generalizing the classical mapping theory of Meyer and Miller. The model suggests a general multistate perspective on real-time surface dynamics by mapping it into spatially disjointed windowing functions, which feature the explicit nonadiabatic controllability. Within this framework, the first nonadiabatic molecular dynamics simulation is performed for atomic hydrogen diffusion on the Cu(001) surface, and the nonequilibrium effect of lattice distortion is studied.

Proving Modigliani and Miller Theories of Capital Structure: The Research on Indonesia’s Cigarette Companies

Modigliani and Miller theories, held as one of the most important theoretical compass for the world of Corporate Finance, has stated some aspects and measurements in which will determine one company’s step of heading towards financial decision of its capital structure. Modigliani and Miller themselves are revising their theorem until they created the second theorem of Modigliani and Miller, and also developing their theorem with the assumption of the existence of taxes, in which in the real world, we can’t deny that it exist. This paper is going to review and re-prove the MM theories in a research of three biggest public listed cigarette companies in Indonesia. Those companies are PT. Hanjaya Mandala Sampoerna Tbk., PT. Bentoel Internasional Investama Tbk., and PT. Gudang Garam Tbk. The analysis would be through the companies’ financial statement from the last 10 years, presented in a yearly basis of period. The reports are going to be compared with the two theorems made by Modigliani and Miller, both with and without tax assumption. As the result, it can be concluded whether the MM theorem works and is relevant for those three companies named above. By using the valuation and capital structure approach with several assumptions necessary to be made, the author has found out that the Modigliani Miller theories of capital structure do hold and are accurate for those given sample companies in representative to an industry. However, given different approach of measuring the cost of equity capital, the author found out that Modigliani Miller theories cannot adapt the cost of capital approach, but instead, go in line with the return on equity approach. Because of that, in some explanations of Modigliani Miller theories, the term cost of capital should not be written in the formulas, but instead, it should be written as the return on equity. The author also found some difference in calculation result between the research calculations and the MM theories, which is that the return on equity decreases as the leverage increase, while the MM theory stated that the return on equity should increase as the leverage increase, but that difference does not violate the theories, and they generally are still hold and valid. This happens because those factors have already been addressed as an exceptional condition in the MM theory, and it proves to be true that it has to be exceptional. Finally, the author addressed and concluded the factors that may lead inaccuracy in making calculations based on the MM theories, and the important assumptions to remember within this theory.

THE SELF AS AN ANCHOR: HOW DO HUMAN ASCRİBE VALUE TO THİNGS

According to the norm theory of Kahneman and Miller, when people evaluate an object, they often think about other objects in the same category, and compare the stimulus object to the anchor (Hsee, 1998, 109). However, people would intrinsically ascribe value to things (Hood & Bloom, 2008) without using an explicit anchor. We argue that instrumental value is embedded in the intrinsic one and therefore intrinsic valuation is active for any evaluation of the individual. In the study, the existence of intrinsic value was tested by using the meditative state of mind as a tool and author found three omnipresent phenomena that affect the assigned value of things: a) Just after a high level of meditative state, participants distinctly assigned lower values to images relative to their non-meditative peers. b) Participants assigned significantly higher values to more complex images only when they focused on these images for a while. c) When participants made instant valuation, while the complexity of images rising, the values assigned took in the form of a U-curve. These situationalities has been integrated and resolved on a theoretical ground..

Degenerate Miller–Paris Transformations

Important new transformations for the generalized hypergeometric functions with integral parameter differences have been discovered some years ago by Miller and Paris and studied in detail in a series of papers by a number of authors. These transformations fail if the free bottom parameter is greater than a free top parameter by a small positive integer. In this paper we fill this gap in the theory of Miller–Paris transformations by computing the limit cases of these transformations in such previously prohibited situations. This leads to a number of new transformation and summation formulas including extensions of the Karlsson–Minton theorem.

Taxonomy of educational objectives and learning theories in the training of laparoscopic surgical techniques in a simulation environment.

The acquisition of psychomotor skills in surgery is the central component of medical residency programs in General Surgery and Specialties. Making learning more effective is a cornerstone of educational processes. This article portrays aspects of educational taxonomies and learning theories that may be involved in the training of surgery. Among the many taxonomies and educational theories applicable to learning in surgery, the following stand out: 1) Dave's taxonomy- Hierarchy to actions that facilitate the acquisition of psychomotor skills; 2) Miller's theory- Step-by-step definition that facilitates acquisition; 3) Ericsson's theory- Competence after repetition of the practice followed by systematic reinforcement; 4) Vigotsky's theory- Definition of the role of the specialist in learning; and 5) Theory of Boud, Schon and Ende- Importance of feedback for students and teachers. Knowledge of these tools by teachers and preceptors can facilitate learning in surgery, especially in more complex activities.

Impact Of Dividend Policy On The Value Of Firms

This study empirically investigates the impact of dividend policy on the value of firms for a sample of twelve (12) consumer and manufacturing companies listed on the Nigerian Stock Exchange (NSE). The study was carried out for a period of 10 years (2007-2016). The empirical estimation is based on the ‘Bird in Hand Dividend Theory’ supported by Fairchild (2010) and employed Random Effect Regression to analyze 120 observations. The results tend to support the theory of Miller and Modigliani (1961) which suggests that dividends are irrelevant to firm value for firms listed on the Nigerian Stock Exchange (NSE). Hence, from the empirical findings, the study concludes by agreeing with most of the dividend irrelevant proponents that dividend does not matter to corporate value. The study therefore carefully recommends that managers must review the opinions of their core investors in deciding dividend policy that meets with their expectations.

Estrutura de capital de empresas listadas na BM&FBovespa: uma análise pós-crise econômica (2008-2009)

O objetivo deste estudo é identificar a composição da estrutura de capital das empresas dos setores de telecomunicação e tecnologia da informação listadas na BM&FBOVESPA, em um período que sucedeu a primeira crise econômica do Século XXI. Assim, pode-se identificar se as empresas utilizam alguma forma de estrutura pré-estabelecida pelas teorias já existentes ou não e qual o risco da estrutura adotada por elas. Para o estudo proposto, foram utilizadas as quatro teorias mais influentes sobre este assunto, que são: a Teoria Tradicional, a Teoria de Modigliani e Miller, a Teoria de Static Trade-off e a Teoria de Pecking Order. Para atingir o objetivo, o método utilizado é o descritivo, através da análise documental e quantitativa dos dados apresentados. Para atingir o objetivo do estudo, foi efetuado levantamento bibliográfico e posteriormente foram calculados os índices de endividamento. Os resultados do estudo indicam que ambos os setores possuem alto grau de endividamento e que o capital de terceiros é tido como prioritário quando há necessidade pela busca por recursos.

A Test of Miller and Modigliani Dividend Policy Irrelevance Theory in Nigerian Stock Market

This study empirically tests for the validity of Miller and Modigliani’s dividend irrelevance proposition in the Nigerian Stock Exchange (NSE). Secondary data were obtained from the Nigerian Stock Exchange fact book and firms’ annual audited financial statements for fifteen years (2001-2015). Mediation Analyses, was used to measure the direct and indirect effects of dividend on stock price. Correction of the anomalous use of current dividend and current earnings by the use of naive expectation of dividend and earnings revealed that the direct effect of expected dividend on share price is significant but the indirect effect of expected dividend on share price through earnings is not significant. The implication of these results is that expected dividend has its unique (direct) effect on share price beyond the effect on share price which it shares with expected earnings (indirect effect). This conclusion suggests that dividend policy is relevant in valuation of shares in NSE. It was therefore recommended that company management should treat dividend as an active corporate finance decision-making variable and should employ dividend in information signalling to capital market investors.

New Meaningful Effects in Modern Capital Structure Theory

Paper is devoted to describe the new meaningful effects in capital structure theory, discovered within modern theory of capital cost and capital structure, created by Brusov, Filatova and Orekhova (BFO theory). These qualitatively new effects are present in general version of BFO theory and absent in its perpetuity limit (Modigliani – Miller theory). BFO theory has changed some main existing principles of financial management. Discovered effects modify our understanding of financial management and dictate some unusual managerial decisions.

BFO Theory Principles and New Opportunities for Company Value and Risk Management

This article explores the significance and additional capabilities of new principles for analyzing the capital structure and calculating the market value of a company. These principles are being developed as part of Brusov–Filatova–Orekhova theory (BFO) and are aimed at considering the diverse factors which affect the market value of companies. These principles include accounting and calculating the value of a company within its lifecycle; focusing on a more complete and differentiated assessment of a company’s risks and their consideration in the course of running the company and managing its market value, compared to in the Modigliani–Miller theory. According to these principles, one should take into account and assess all significant possible effects that are formed in the course of running a company with regard to its value, even if such effects do not explicitly materialize until a certain point of time, are not taken into account during the market appraisal and are used during the company valuation as some kind of a virtual, imaginary value. Changes in the calculation of such virtual values of a company value may suggest that risks have accumulated both at the micro and macro level of economy. Studying the mechanisms created in the course of running a company and aimed at transforming the virtual values of its value into real positive or negative changes in the value can be an important tool for enhancing the effectiveness of risk management in companies and economic systems.

Conflict in the Mechanism and Kinetics of the Barrierless Reaction between SH and NO2 Radicals.

There are some unsettled issues regarding the mechanism and kinetics of an important atmospheric reaction of NO2 radical with the SH radical. The existing mechanism is based on the formation of HSO and NO radicals, both of which can result only along one barrierless channel. However, the detection of NO radical has never been reported though the formation of HSO radical has been followed in some studies to determine the rate constants. The latter are mainly obtained by monitoring the SH decay, but rate constants are reported to be highly conflicting among the existing studies reporting its value ranging from 10-10 to 10-12 cm3 molecule-1 sec-1. The present work attempts to resolve these issues by exploring various reaction pathways through the global reaction route mapping of the potential energy surface at the level of spin-unrestricted and spin-restricted coupled-cluster and density functional theories. The initial association of two radicals was found to proceed via two barrierless modes: (1) S-N association leading to HSNO2 and, (2) S-O association resulting in HSONO, in particular the cis-isomer. The kinetics of the barrierless pathways was investigated through rate constants computed using canonical variational transition state theory (CVTST) along with their temperature and pressure dependence investigated using the master equation. The rate constants calculated using spin-unrestricted methods are found to be in agreement with experimentally observed range of rate constant, and the formation of cis-HSONO (via mode 2) is observed to be the main contributing channel. Contrary to the results of spin-restricted calculations, the barrierless channel (mode 1) leading to the formation of HSNO2 is predicted to involve two bottlenecks when results using spin-unrestricted calculations were analyzed. Notably, the spin-unrestricted calculations predict a prereaction complex for the formation of S-N bond (via mode 1) which has been treated using Miller's unified transition state theory with a two transition state model. The fate of all the species involved in the reaction is critically evaluated in the present work, and the predictions made can be a subject of further experimental and theoretical studies involving radical-radical reactions.

Does capital structure matter? Reflection on capital structure irrelevance theory: Modigliani-Miller theorem (MM 1958)

Since the 1950s, corporate financing has been an arena for on-going debates that focus on Modigliani and Miller's pioneering theorems of 1958 and 1963. The main purpose of this paper is to present a critical reflection on the debate around corporate capital structure irrelevance that was triggered by Modigliani and Miller theorem in 1958, while taking in consideration the literature, theoretical and empirical findings and the recent global financial crisis (i.e. debt crisis). The paper will briefly review and discuss alternative theories of capital structure, such as the traditional view, the trade-off theory and the pecking order theory in light of reality and perfect capital market hypothesis. The paper starts by defining the concept of capital structure, followed by discussing the assumptions of perfect capital markets under which 'the Modigliani and Miller's irrelevance theory' was originally conceptualised. It finally reflects on the findings before proceeding with the paper's conclusion.

The Impact of Microeconomic Variables on Stock Return by Moderating of Money Supply

The purpose of this study is to empirically investigate the effect of microeconomic variables on stock return with moderating role of money supply (MS). The selected microeconomic variables in this study are debt-to-equity ratio (DE), dividend per share (DPS), and quick ratio (QR). Firm size and book-to-market value are considered as controlling variables. The period of the study is from 2003 to 2012 and the sample population of this study is 300 companies listed on Kuala Lumpur Stock Exchange (KLSE). Secondary data were collected from DataStream International, financial annual reports, and the World Bank databank. Generalized least squares (GLS) technique was used to estimate the predictive regressions in form of multiple models of panel data sets. According to the findings, MS moderates the impact of DE and QR on stock return, but does not moderate the effect of DPS on stock return. Besides, MS moderates the impact of all selected predictors on stock return. The findings of this study further show that an increase in value of a firm’s debt relative to its equity would cause a decrease in the firm’s stock return. The results also indicate that firms with higher QR and DPS are likely to have a higher stock return. Overall, the findings of this research are consistent with Modigliani and Miller's capital structure theory, as well as Pecking Order and Bird In Hand theory. The findings of this study would be of interest to domestic and international investors, stockbrokers, board of directors, financial managers, and policy makers.