The Efficient Market Hypothesis: A Critical Review of the Literature

The IUP Journal of Financial Risk Management, Vol. XII, No. 4, December 2015, pp. 48-63

17 Pages Posted: 14 Jan 2016 Last revised: 20 May 2020

See all articles by Mehwish Naseer

Mehwish Naseer

COMSATS Institute of Information Technology, Abbottabad Campus

Dr. Yasir Bin Tariq

COMSATS University Islamabad, Abbottabad Campus

Date Written: January 13, 2016

Abstract

An efficient capital market is one in which security prices adjust rapidly to the arrival of new information. The Efficient Market Hypothesis (EMH) suggests that security prices that prevail at any time in market should be an unbiased reflection of all currently available information and return earned is consistent with their perceived risk. Theoretical and empirical literature on EMH offers mixed evidences. Some studies have supported the hypothesis, while others have revealed some anomalies, i.e., deviations from the rules of EMH. This review paper presents an analysis of EMH and possible causes and evidences of anomalies. It also examines stock market efficiency in Karachi Stock Exchange.

Suggested Citation

Naseer, Mehwish and Bin Tariq, Yasir, The Efficient Market Hypothesis: A Critical Review of the Literature (January 13, 2016). The IUP Journal of Financial Risk Management, Vol. XII, No. 4, December 2015, pp. 48-63, Available at SSRN: https://ssrn.com/abstract=2714844

Mehwish Naseer (Contact Author)

COMSATS Institute of Information Technology, Abbottabad Campus

University Road
Tobe Camp
Abbottabad, Khyber Pakhtun Khawa 22060
Pakistan

Yasir Bin Tariq

COMSATS University Islamabad, Abbottabad Campus ( email )

University Road
Tobe Camp
Abbotabad, Khyber Pakhtun Khawa 22060
Pakistan

HOME PAGE: http://www.cuiatd.edu.pk

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