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The Efficient Market Hypothesis—A Discussion of Institutional, Agency and Behavioural Issues

Author

Listed:
  • Robert G. Bowman

    (Department of Accounting and Finance, University of Auckland, Private Bag 92019, Auckland, New Zealand.)

  • John Buchanan

    (School of Management Studies, University of Waikato, Private Bag 3105, Hamilton, New Zealand.)

Abstract

The efficient market hypothesis is an elegant economic concept which has been extensively researched. The results of the research are broadly supportive of the concept for developed and competitive securities markets. Yet many, perhaps even most corporate executives and investors have serious reservations about or even reject market efficiency. Why? We argue that there are reasons to expect that, in general, people will systematically underestimate the level of efficiency in a market or of a security. We develop this position and group the discussion into market structure reasons and behavioural reasons.

Suggested Citation

  • Robert G. Bowman & John Buchanan, 1995. "The Efficient Market Hypothesis—A Discussion of Institutional, Agency and Behavioural Issues," Australian Journal of Management, Australian School of Business, vol. 20(2), pages 155-166, December.
    • Handle: RePEc:sae:ausman:v:20:y:1995:i:2:p:155-166
    DOI: 10.1177/031289629502000203
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    References listed on IDEAS

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    Cited by:

    1. Nicholas Apergis & Alexandros Gabrielsen & Lee Smales, 2016. "(Unusual) weather and stock returns—I am not in the mood for mood: further evidence from international markets," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 30(1), pages 63-94, February.
    2. Apergis, Nicholas & Gupta, Rangan, 2017. "Can (unusual) weather conditions in New York predict South African stock returns?," Research in International Business and Finance, Elsevier, vol. 41(C), pages 377-386.
    3. Arvid O. I. Hoffmann & Thomas Post & Tom Smith, 2017. "How return and risk experiences shape investor beliefs and preferences," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(3), pages 759-788, September.
    4. Nicholas Apergis & Rangan Gupta, 2016. "Can Weather Conditions in New York Predict South African Stock Returns?," Working Papers 201634, University of Pretoria, Department of Economics.

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