Market Efficiency and Accounting Research: A Discussion of 'Capital Market Research in Accounting' by S.P. Kothari

31 Pages Posted: 2 Feb 2001

See all articles by Charles M.C. Lee

Charles M.C. Lee

Stanford University - Graduate School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 2, 2001

Abstract

Much of capital market research in accounting over the past 20 years has assumed that the price adjustment process to information is instantaneous and/or trivial. This basic assumption has had an enormous influence on the way we select research topics, design empirical tests, and interpret research findings. In this discussion, I argue that price discovery is a complex process, deserving of more attention. I highlight significant problems associated with a naive view of market efficiency, and advocate a more general model involving noise traders. Finally, I discuss the implications of recent evidence against market efficiency for future capital market research in accounting.

JEL Classification: M41, G12, G14

Suggested Citation

Lee, Charles M.C., Market Efficiency and Accounting Research: A Discussion of 'Capital Market Research in Accounting' by S.P. Kothari (January 2, 2001). JAE Rochester Conference April 2000. Available at SSRN: https://ssrn.com/abstract=258495 or http://dx.doi.org/10.2139/ssrn.258495

Charles M.C. Lee (Contact Author)

Stanford University - Graduate School of Business ( email )

Stanford Graduate School of Business
655 Knight Way
Stanford, CA 94305-5015
United States
650-721-1295 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
3,994
Abstract Views
11,264
rank
2,284
PlumX Metrics