The implications of the efficient markets hypothesis for corporate managers regarding accounting earnings are that managers should not focus on accounting earnings but instead focus on maximising cash flows.

Question

Quizplus · Accepted Answer

The efficient markets hypothesis suggests that stock prices reflect all available information, meaning that accounting earnings should already be reflected in the stock price. Therefore, corporate managers should focus on maximizing cash flows rather than solely focusing on accounting earnings.

The Implications of the Efficient Markets Hypothesis for Corporate Managers