OTC stocks may not uphold the semi-strong form of the efficient market hypothesis, while listed stocks generally do.

Question

Quizplus · Accepted Answer

Basically, the semi-strong form of the efficient market hypothesis supports the notion that there is no learning lag in the distribution of public information. When a company makes an announcement, investors across the country assess the information with equal speed. Also, a major firm listed on the New York Stock Exchange could hardly hope to utilize some questionable accounting practice that deceptively leads to higher reported profits, and not expect sophisticated analysts to pick it up. (This may not be equally true for a lesser-known firm that trades over the counter and enjoys little investor attention.)

OTC Stocks May Not Uphold the Semi-Strong Form of the Efficient