Miller's work was based on the work of Markowitz (whose "portfolio
theory" established that wealth can best be invested in assets
that vary in terms of risk and expected return) and Sharpe (who developed
the "capital asset pricing model," a model to explain how
securities prices reflect risks and potential returns). The Modigliani-Miller
theorem explains the relationship between a company's capital asset
structure and dividend policy and its market value and cost of capital;
the theorem demonstrated that how a manufacturing company funds its
activities is less important than the profitability of those activities.
Miller was recognized as one of the most important developers of theoretical
and empirical analysis in the field of corporate finance. In addition
to his position as the business school's Robert R. McCormick distinguished
service professor, Miller served as a director of the Chicago Mercantile
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