What Should You Know About the Theory of Corporate Finance?

This paper outlines the thinking of financial theorists on issues most relevant to those influencing financial decision‐making within a firm. While the review is not comprehensive, it does provide a foundation for understanding what is included in the modern theory of corporate finance. Perhaps more importantly, the reader should gain an appreciation for what is financial “myth” and what is financial “trust.” The paper concludes with a section on managerial implications.