The study examines and critical reviews the literature for the different implications based on
the three levels of the Efficient Market Hypothesis for investors and company managers. If
the weak form of the EMH holds, the technical analyse is useless, but ninety percent of
traders in London are using it. If the semi-strong-form holds the fundamental analysis, study
of published accounts, search for undervalued companies are useless and investors should be
focus on diversification and avoiding of transaction costs. Furthermore the semi-strong form
would imply for managers, that accounting disclosure to deceived shareholders is useless, the
company market value is the best indicator for the company value and management decisions,
the company does not need specialists for the timing of issues and there are no opportunities
for a cheap acquisition of another company. At least if the strong-form of the EMH holds, it
would imply that even with insider information it would not be possible to get above average
returns. The literature shows, that the studies of EMH have made an important contribution to
our understanding of the security market. It also shows that in some cases scientific results do
not strong influence the behaviour of manager and investors in the “real world”.
Table of contents
LIST OF ABBREVIATIONS
LIST OF FIGURE
EXECUTIVE SUMMARY
1. INTRODUCTION
2. EFFICIENT MARKET HYPOTHESIS
2.1 MARKET EFFICIENCY
2.2 THREE LEVELS OF EFFICIENT MARKETS
2.3 MYTH ABOUT THE EMH
3. INFORMATION ABOUT EMPIRICAL RESULTS
4. IMPLICATIONS OF THE EMH FOR INVESTORS
4.1 WHEN THE WEAK-FORM OF THE EMH HOLDS
4.1.1 Technical Analysis is useless
4.2 WHEN THE SEMI-STRONG-FORM OF THE EMH HOLDS
4.2.1 Fundamental Analysis is useless
4.2.2 The study of published accounts is useless
4.2.3 The most tips are worthless
4.2.4 The search for undervalued companies is useless
4.2.5 Portfolio diversification is important to reduce non-systematic risk
4.2.6 Transaction costs should be as low as possible
4.2.7 Unit Trusts do not perform better than their beta
4.3 WHEN THE STRONG-FROM OF THE EMH HOLDS
4.3.1 Insider information are useless
5. IMPLICATIONS OF THE EMH FOR MANAGER
5.1 ACCOUNTING DISCLOSURE TO DECEIVED SHAREHOLDERS IS USELESS
5.2 MARKET VALUE AS INDICATOR FOR COMPANY VALUE AND MANAGEMENT DECISIONS
5.3 COMPANIES DO NOT NEED SPECIALISTS FOR THE TIMING OF NEW ISSUES
5.4 THERE ARE NO OPPORTUNITIES FOR A CHEAP ACQUISITION
6. CONCLUSION
7. BIBLIOGRAPHY
-
¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X. -
¡Carge sus propios textos! Gane dinero y un iPhone X.