Fisher's separation theorem stipulates that the goal of any firm is to increase its value to the fullest extent, regardless of the preferences of the firm's owners. The theorem is named after American economist Irving Fisher, who first proposed this idea.
The theorem can be broken down into three key assertions. First, a firm's investment decisions are separate from the preferences of the firm's owners. Second, a firm's investment decisions are separate from a firm's financing decisions. And, third, the value of a firm's investments is separate from the mix of methods used to finance the investments.
Thus, the attitudes of a firm's owners are not taken into consideration during the process of selecting investments, and the goal of maximizing the firm's value is the primary consideration for making investment decisions. Fisher's separation theorem concludes that a firm's value is not determined by the way it is financed or the dividends paid to the firm's owners.
For related articles, check out Ten Books Every Investor Should Read and Profiting From Panic Selling.
This question was answered by Richard C. Wilson.

What does the Fisher Effect say about nominal interest rates?
Read about what economists call the Fisher effect, which states that real interest rates are equal to nominal rates minus ... Read Answer >> 
How is the Macaulay duration related to fixed income markets?
Determine how monetary policy influences the Fisher effect. The Fisher effect is used to determine real interest rates which ... Read Answer >> 
How does the Fisher effect illustrate returns on bonds?
Learn how the Fisher effect shows the impact of expected future increases in inflation on the prices of bonds and their interest ... Read Answer >> 
Can real interest rates be negative?
Discover the circumstances that can cause real interest rates to be negative and learn how to calculate the values of real ... Read Answer >>

Small Business
Ken Fisher's Success Story: Net Worth, Education & Top Quotes
Learn about the rise of Kenneth Fisher, the wouldbe forester who became the founder of one of the largest money management firms in the country. 
Investing
Where Is Ken Fisher Spending His Billions and Why?
Fisher's fund has considerably outperformed the average hedge fund for the whole of 2016 and part of 2015. 
Investing
Explaining the Central Limit Theorem
Central limit theorem is a fundamental concept in probability theory. 
Investing
The Top 5 Positions in Ken Fisher's Portfolio (AMZN, LQD)
Pay attention to whether Amazon.com, Inc. remains the top holding of Fisher Asset Management despite a 27% share price drop during the first five weeks of 2016. 
Insights
The International Fisher Effect: An Introduction
The Fisher models have the ability to illustrate the expected relationship between interest rates, inflation and exchange rates. 
Small Business
What is a Firm?
A firm is a business or organization that sells goods or services on a forprofit basis. 
Investing
Financial Forecasting: The Bayesian Method
This method can help refine probability estimates using an intuitive process. 
Trading
Spotting Breakouts As Easy As ACD
Wondering what it means to be a "logical trader"? Take a look at this system devised by Mark Fisher. 
Investing
Illumina Closes Slightly Up on Takeover Reports
It seems that DNA sequencing company Illumina (NASDAQ: ILMN) might be in play. Citing an individual "claiming to have knowledge of the matter," Streetinsider.com reports that the company has ...

Fisher's Separation Theorem
A theory stating that: 1. A firm's choice of investments are ... 
Bayes' Theorem
A formula for determining conditional probability named after ... 
Irrelevance Proposition Theorem
A theory of corporate capital structure that posits that financial ... 
Coase Theorem
A legal and economic theory that affirms that where there are ... 
Mutual Fund Theorem
An investing theory, postulated by Nobel laureate James Tobin, ... 
Arrow's Impossibility Theorem
A socialchoice paradox illustrating the impossibility of having ...