If the share market can be considered efficient, there are significant implications for financial managers. Some of them are considered under the following headings:
If the share market is efficient, it will respon instantaniously and without bias to information, including information that is released by company management.
Communicating with the stock market
In an efficient market, prices respond quickly to information, Including information that is released by company Management.
Using share price as a measure of company performance
In an efficient market, The current share prices is the best available estimate of a company’s ‘true value’.
Issuing new securities
If markets are efficient, there are a number of implications for companies intending to issue new securities
MC.Graw Hill Irwin
Business Finance. 2002