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Emh

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Emh

  • This topic has 5 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • February 14, 2022 at 5:10 am #648572
    poqipi11
    Participant
    • Topics: 18
    • Replies: 9
    • ☆

    Can a financial manager or manager deceive the market through the timing of issuing new information or the presentation of that information in a semi-stromg market?

    February 14, 2022 at 7:20 am #648580
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54671
    • ☆☆☆☆☆

    The market could be deceived, but if that was being done deliberately it would no longer be a semi-strong market.

    February 14, 2022 at 10:23 am #648591
    poqipi11
    Participant
    • Topics: 18
    • Replies: 9
    • ☆

    John, can you please elaborate on that?

    And then can you please confirm if this is valid : the following is a answer to a question named “Phobis” in the kaplan kit :

    The significance to a listed company of its shares being traded on a stock market
    which is found to be semi?strong form efficient is that any information relating to the
    company is quickly and accurately reflected in its share price. Managers will not be
    able to deceive the market by the timing or presentation of new information, such as
    annual reports or analysts’ briefings, since the market processes the information
    quickly and accurately to produce fair prices. Managers should therefore simply
    concentrate on making financial decisions that increase the wealth of shareholders.

    February 14, 2022 at 3:02 pm #648620
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54671
    • ☆☆☆☆☆

    The quote is from the examiners own answer which is perfectly correct (although it depends how you interpret the word ‘deceive’.

    All he is saying is that with a semi-strong market the share price will react quickly and accurately to knew information. So although delaying the timing of information etc. can delay the share price reacting, that will only be in the short term and when the the information is released the share price will react. Whether that can be called deceiving is a moot point, but obviously the question did not require the word deceive to be used 🙂

    February 14, 2022 at 3:32 pm #648623
    poqipi11
    Participant
    • Topics: 18
    • Replies: 9
    • ☆

    So, in conclusion, the timing of the information being released does have an impact more or less but it cant be called deceiving since the processing of new information is very quick and the market will adjust the share price quite instantly making the so-called “deceiving” useless?

    February 15, 2022 at 9:37 am #648652
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54671
    • ☆☆☆☆☆

    Agreed 🙂

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