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The Efficient Market Hypothesis - A Discussion
of Institutional, Agency and Behavioural Issues
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Robert G. Bowman and John Buchanan
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Abstract
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The efficient market hypothesis is an elegant ecomonic 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.
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Download this article.
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Keywords
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EFFICIENT MARKET HYPOTHESIS; BEHAVIOURAL ECONOMICS.
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Contact Details
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
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We benefited from the helpful comments of Gordon Alexander, David Emanuel, Russ Fuller, Ray King, Bob Officer, Roch Parayre, Bill Sharpe, Rex Thompson, Tony van Zijl, Bryce Wilkinson, the anonymous referees and the participants in seminars at the Universities of Auckland, Canterbury, Melbourne and Sydney and at Southern Methodist University.
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