A reappraisal of Modigliani's finance theories

Terenzio Cozzi ()
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Terenzio Cozzi: Università degli Studi di Torino, Dipartimento di Economia, Torino (Italy)

Banca Nazionale del Lavoro Quarterly Review, 2005, vol. 58, issue 233-234, 215-235

Abstract: The paper examines the influence of Modigliani's contributions to the theory of finance. As for the term structure of interest rates, the preferred habitat theory, had a mixed fortune: it was utilized by financial managers for a rather long time, before being discarded in the 1980s and, perhaps, being somewhat resumed in our days. The Modigliani-Miller theorem is considered as a landmark in finance theory, even if the controversies over both its assumptions and conclusions had indeed been very strong. By contrast, financial managers completely disregarded the thesis of an irrational undervaluation of stocks in inflationary periods. But most economists appreciate the proof that, for rather long periods, the market can be inefficient in channelling the resources towards the most productive utilizations.

Keywords: Finance (search for similar items in EconPapers)
JEL-codes: B21 B22 B31 G00 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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