7101AFE: Lecture 5 Topic T i 6 expectant Markets Research Some slides adapted from those of Craig Deegan; Others developed by Griffith Staff Qantas Flying in The Red! http://video.theaustralian.com.au/227150272 9/Qantas-reports-first-annual-loss-in-twodecades On 23 Aug 2012, Qantas report annual loss of $245mil, its first annual loss in nearly two decades, and cancelled orders for 35 of Boeing's more fuel- economical 787-9 aircraft in a bid to save $US8.5 billion ($8.1bn). • Despite this show loss, at 2:40 pm on 23 Aug 2012, Qantas shares were trading at $1.21, 3.42% up from the previous day’s closing price of $1.17! • 2 Learning objectives of this topic • In this topic you leave alone be introduced to â€" Capital markets research (CMR) â€" the economical Market venture (EMH) â€" Why earnings should be related to security system prices â€" major research results of CMR in financial accounting â€" Research findings that contend the EMH 3 1 Capital markets researchâ€"introduction • Examines the relation between financial averment information and the capital markets • B any and Brown (1968), and Beaver (1968) pioneered CMR in accounting. • Is accounting information (e.g., reported earnings, segment data) useful to investors? • take to be relevant? • Are new accounting standards “better†than older standards? • Are investors indifferent between recognition and disclosure? 4 The Efficient Market Hypothesis (EMH) • A central assumption in CMR is the EMH.
• EMH: Fama (1970, 1991) defines an efficient market as one in which “security prices fully fall all available informationâ€. • gage prices follow a “random walk†in an efficient market. • Implications: â€" The market has no memory. â€" Fundamental analysis is useless. â€" No investor systematically beats the market. 5 Three forms of market efficiency • Weak form: prices reflect information about past prices and trading volumes • Semi-strong form: all publicly available information is rapidly and fully impounded...
• EMH: Fama (1970, 1991) defines an efficient market as one in which “security prices fully fall all available informationâ€. • gage prices follow a “random walk†in an efficient market. • Implications: â€" The market has no memory. â€" Fundamental analysis is useless. â€" No investor systematically beats the market. 5 Three forms of market efficiency • Weak form: prices reflect information about past prices and trading volumes • Semi-strong form: all publicly available information is rapidly and fully impounded...
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