The Relationship Between Aggregate-Market Behaviour And Accounting Variables (The Theory of Capital-Market Efficiency By Beaver)

Abstract

This paper discusses and summarizes the efficient market hypotheses initially proposed by Fama (1970). According to the efficient market theory, the market is said to be efficient if 'security prices reflect all available information'. Fama (1970) contends that there are three types of market efficiency, namely weak form market efficiency, semi-strong form market efficiency, and strong form market efficiency. Over the last three decades, the efficient market theory has become the center of research interest and has attracted attention, which has contributed to the development of corporate finance theory. Other interesting aspect of the efficient market hypothesis is the strong evident of anomaly in the market, which appear to confront the efficient market hypothesis.