Was Modigliani's irrelevance theorem always accepted?
The Modigliani-Miller theorem, in its purest form, relies on assumptions like perfect capital markets and no taxes, which are idealizations. While it provided a powerful theoretical foundation, its applicability in the real world, with market imperfections and tax considerations, has been a subject of extensive research and debate. The theorem's significance lies in setting a benchmark against which the impact of these real-world factors can be understood.
Ask Franco Modigliani the follow-up →