The efficient market hypothesis and a change to L.I.F.O. : an empirical study on the Johannesburg Stock Exchange

Knight, Rory Francis Murphy

The efficient market hypothesis and a change to L.I.F.O. : an empirical study on the Johannesburg Stock Exchange

Master Thesis

1981

Publisher

University of Cape Town

Department

College of Accounting

Faculty

Faculty of Commerce

Abstract

The dissertation presents a discussion on the Efficient Market Hypothesis (EMH) with particular reference to the implications for Financial Reporting. Furthermore a conceptual framework is proposed for empirical research in accounting. The results obtained indicate a significant negative reaction to the announcement of a change to L.I.F.O, in the aggregate, which was shown to be directly proportional to the size of the impact on reported earnings. The relative risk of the firms was shown to be an intervening variable in that the low risk firms experienced a less severe negative reaction. It is concluded that the JSE is an inefficient market since the information is impounded slowly. As the market appears to be unable to look behind the accounting numbers, further evidence of inefficiency is apparent. Finally the thesis concludes that the JSE may be developing as the most recent reactions were less negative and far quicker, on aggregate.

Description

Bibliography: p. 250-271.

Keywords

Economics

Reference:

Collections

Masters

Full item page