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Efficient Market (efficient + market)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting80%

Terms modified by Efficient Market

  • efficient market hypothesis
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    Selected Abstracts

    Risk and Return Around Bond Rating Changes: New Evidence From the Spanish Stock Market

    JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 5-6 2006
    Pilar Abad-Romero
    Abstract:, This study analyzes the effect of corporate bond rating changes on stock prices in the Spanish stock market. We explore their effects on excess of returns and systematic risk. Rating changes by Moody's, Standard and Poor's and FitchIBCA are analyzed. On an efficient market, these changes will only have some effect if they contain some new information or if they are associated to a redistribution of wealth between shareholders and bondholders. We use an extension of the event study dummy approach. Our results support the redistribution of wealth hypothesis in the abnormal returns behavior. We also find that changes in both directions cause a rebalancing effect in the total risk of the firm, with significant reductions on their systematic component. [source]

    The Russian Coal Industry in Transition: A Linear Programming Application

    OPEC ENERGY REVIEW, Issue 1 2001
    Bo Jonsson
    This paper analyses the restructuring of the Russian steam coal market. The main purpose is to compare the prevailing steam coal flows between mine basins and electric utilities and the actual coal prices with those that would prevail in an efficient market. The analysis is done within a short-run linear programming model. Coal demands and supplies are identified. The objective function that is minimised consists of the delivered costs, i.e. extraction plus transportation costs, subject to exogenous demand requirements and capacity restrictions. We conclude that, in spite of attempted restructuring, the Russian coal steam coal market is still highly inefficient. This is mainly due to the fact that large amounts of coal are delivered over very long distances, a pattern that often cannot be justified in economic terms. Because of cost-inefficient coal deliveries and large subsidies, coal prices are also highly distorted. Given the communist legacies of the past, the restructuring process will probably take considerable time and is unlikely to be successful until there is a fundamental change in the economic and political institutions. [source]

    Shopping for Schools: How Do Marginal Consumers Gather Information About Schools?

    POLICY STUDIES JOURNAL, Issue 2 2003
    Jack Buckley
    The theory of the marginal consumer holds that a subset of better informed consumers can create a globally more efficient market through their purchase decisions. In the market for education created by recent school choice initiatives, these "market mavens" are essential to the successful functioning of the choice system given the empirically documented low quantity and quality of information possessed by the average consumer. Little is known, however, about the differences between how marginal consumers and average consumers of education search for information and make decisions about their children's schooling. [source]

    The Global Financial Crisis and the Efficient Market Hypothesis: What Have We Learned?

    JOURNAL OF APPLIED CORPORATE FINANCE, Issue 4 2009
    Ray Ball
    The sharp economic downturn and turmoil in the financial markets, commonly referred to as the "global financial crisis," has spawned an impressive outpouring of blame. The efficient market hypothesis (EMH),the idea that competitive financial markets exploit all available information when setting security prices,has been singled out for particular attention. Like all successful theories, the EMH has major limitations, even as it continues to provide the foundation for not only past accomplishment, but future advances in the field of finance. Despite the theory's undoubted limitations, the claim that it is responsible for the current worldwide crisis seems wildly exaggerated. This essay shows the misreading of the theory and logical inconsistencies involved in popular arguments that EMH played a significant role in (1) the formation of the real estate and stock market bubbles, (2) investment practitioners' miscalculation of risks, and (3) the failure of regulators to recognize the bubbles and avert the crisis. At the same time, the author argues that the collapse of Lehman Brothers and other large financial institutions, far from resulting from excessive faith in efficient markets, reflects a failure to heed the lessons of efficient markets. In the author's words, "To me, Lehman's demise conclusively demonstrates that, in a competitive capital market, if you take massive risky positions financed with extraordinary leverage, you are bound to lose big one day,no matter how large and venerable you are." Finally, behavioral finance, widely considered as challenging and even supplanting efficient markets theory, is viewed in this article as complementing if not reinforcing efficient markets theory. As the author says, "it takes a theory to beat a theory." Behavioralism, for all its important contributions to finance literature, is described as not a theory but rather "a collection of ideas and results", one that depends for its existence on the theory of efficient markets. [source]

    Risk Management in Agricultural Markets: A Review

    THE JOURNAL OF FUTURES MARKETS, Issue 10 2001
    William G. Tomek
    This article surveys and evaluates the current state of knowledge about producers' marketing strategies to manage price and revenue risk for farm commodities. The review highlights gaps between concepts and their implementation. Many well-developed models of price behavior exist, but appropriate characterization and estimation of the probability distributions of commodity prices remain elusive. Hence, the preferred measure of price risk is ambiguous. Numerous models of optimal marketing portfolios for farmers have been specified, but their behavior appears to be inconsistent with most, if not all, of these models. In addition, some research suggests that farmers can earn speculative profits, which is inconsistent with notions of efficient markets. The conclusions discuss what academic research can and cannot accomplish in relation to assisting producers with risk-management decisions. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21:953,985, 2001 [source]