An in-Depth Understanding of Capital Market Theory: a Literature Review in the Context of Financial Management

Abstract

This article aims to present an in-depth understanding of capital market theory and its relevance in the context of corporate financial management. A literature review was conducted to analyze various concepts, theories, and principles that underlie the functioning of the capital market and their impact on financial decision-making. By exploring the current literature, this article provides comprehensive insights into capital market concepts, including market efficiency, stock prices, portfolio diversification, and investment strategies. In addition, this article also discusses the role of the capital market in allocating financial resources, increasing liquidity, and reducing risk for companies. As such, this article provides a solid theoretical foundation for further understanding of effective financial management.