What is the 'Fisher's Separation Theorem'
The Fisher's separation theorem is a theory stating that:
1. A firm's choice of investments are separate from its owner's attitudes towards the investments.
2. It is possible to separate a firm's investment decisions from the firm's financial decisions.
Next Up
BREAKING DOWN 'Fisher's Separation Theorem'
This theory says a firm's value is not affected by how its investments are financed or how the distributions (dividends) are made to the owners.
RELATED TERMS

Irrelevance Proposition Theorem
A theory of corporate capital structure that posits that financial ... 
Entity Theory
The assumption that the economic activities of a business is ... 
ModiglianiMiller Theorem  M&M
A financial theory stating that the market value of a firm is ... 
Firm
A firm is a business organization, such as a corporation, limited ... 
Bayes' Theorem
A formula for determining conditional probability named after ... 
Mutual Fund Theorem
An investing theory, postulated by Nobel laureate James Tobin, ...
Related Articles

Investing News
Fisher Investments: Investment Manager Highlight
Take a close look at Fisher Investments, a giant among money management firms. 
Investing Basics
Understanding the ModiglianiMiller Theorem
The ModiglianiMiller (M&M) theorem is used in financial and economic studies to analyze the value of a firm, such as a business or a corporation. 
Investing News
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. 
Economics
What is a Firm?
A firm is a business or organization that sells goods or services on a forprofit basis. 
Fundamental Analysis
Explaining the Central Limit Theorem
Central limit theorem is a fundamental concept in probability theory. 
Fundamental Analysis
7 Controversial Investing Theories
We take a closer look at the theories that attempt to explain and influence the market. 
Trading Strategies
What's The Difference Between A Stop And A Limit Order?
Find out what separates these two market orders and what they can do for you. 
Personal Finance
Marital Union; Financial Separation
For a happy marriage, a financial separation may be the best solution. 
Retirement
Financial Career Shift: Get In The Driver's Seat
Before you agree to work for another investment firm, be sure you know what you're getting into. 
Investing Basics
Modern Portfolio Theory vs. Behavioral Finance
Modern portfolio theory and behavioral finance represent differing schools of thought that attempt to explain investor behavior. Perhaps the easiest way to think about their arguments and positions ...
RELATED FAQS

What is Fisher's separation theorem?
Fisher's separation theorem stipulates that the goal of any firm is to increase its value to the fullest extent, regardless ... Read Answer >> 
What are the main principles of the HeckscherOhlin Model?
Learn about the four main principles of the HeckscherOlin model, and find out how the model describes patterns of commerce ... Read Answer >> 
How valid is the notion of economies of scope?
Gain an understanding of how economies of scope work, why they appear to be a viable concept and under what circumstances ... Read Answer >> 
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 >> 
What is the difference between private equity and venture capital?
Learn the differences between private equity and venture capital, especially in terms of how these types of firms invest ... Read Answer >> 
What percentage of asset management firms are privately held and not publicly traded?
Explore asset management firms, a major part of the financial services sector, and learn about the respective markets served ... Read Answer >>