Define strong form efficiency, Financial Accounting

Assignment Help:

Q. Define Strong form efficiency?

In robustly efficient market finance directors will be alert to the fact that market prices are an accurate reflection of their company's financial prospects as well as that if they behave in a manner which results in bad financial decisions the share price will quickly fall to compensate for the worsening prospects.

This signifies that the effect of an efficient market on financial management is that it keeps managers alert to the consequences of their decisions. In an incompetent world prices may take a while to adjust to reflect poor planning or control but in a semi-strong or strong market environment this will not be true. It can therefore be said that the efficient markets hypothesis encourages higher quality financial management. In a alike vein it also serves to discourage the artificial manipulation of accounting information as the truth will quickly be realised and prices adjusted accordingly.


Related Discussions:- Define strong form efficiency

IAS 40, Hi I am doing my thesis on IAS 40 and I''m sort of stuck with find...

Hi I am doing my thesis on IAS 40 and I''m sort of stuck with finding information. I need to find positive and negative international critique on the standard

Assertion, Assertion -Implicit or explicit representations by an entity's m...

Assertion -Implicit or explicit representations by an entity's management which are embodied infinancial statement components and for which AUDITOR obtains and evaluates evidential

Calculate the marginal tax-rate and average tax rate, Thomas Crown expects ...

Thomas Crown expects to earn the following stream of annual income for the next four years:- $41,000; $45,000; $38,000 and $50,000. Although he has adopted the ‘Pay Yourself Firs

Auditngrol ., what type of control procedures were ignored at daiwa

what type of control procedures were ignored at daiwa

Return on Equity, Maghrabi Enclosure follows a moderate current asset inves...

Maghrabi Enclosure follows a moderate current asset investment policy, but it is considering whether to shift to a different strategy. The firm''s annual sales are $500,000; its f

State the economic benefit of having accounting information, State the Econ...

State the Economic benefit of having accounting information Economic benefit of having accounting information is even harder to assess.  It's possible to implement some 'scienc

Acoounts, The book of Deven Verma could not be tallied. The accountant tran...

The book of Deven Verma could not be tallied. The accountant transferred the difference of Rs. 1,270 in the suspense account on the debit side. The following mistakes were found la

Stockholders equity changed, On May 1, 2010, Ziek Corp. declared and issued...

On May 1, 2010, Ziek Corp. declared and issued a 10% common stock dividend. Prior to this dividend, Ziek had 100,000 shares of $1 par value common stock issued and outstanding. The

Explain in detail about the sole proprietorship, Explain in detail about th...

Explain in detail about the Sole proprietorship Sole proprietorship, as the name suggests, is where an individual is the sole owner of a business. This type of business is ofte

Liquidity ratio, For each of the ratios listed below, indicate by the appro...

For each of the ratios listed below, indicate by the appropriate code letter, whether itis a liquidity ratio, a profitability ratio, or a solvency ratio. Code: L=Liquidity rati

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd