Chapter 13 CorporateFinancing Decisions and Efficient Capital Markets

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Chapter 13 Corporate-Financing Decisions and
Efficient Capital Markets

• 13.1 Can Financing Decisions Create Value?
• 13.2 A Description of Efficient Capital Markets
• 13.3 The Different Types of Efficiency
• 13.4 The Evidence
• 13.5 Implications for Corporate Finance
• 13.6 Summary and Conclusions

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Reaction of Stock Price to New Information in
Efficient and Inefficient Markets
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Relationship among Three Different Information
Sets
All informationrelevant to a stock
Information setof publicly availableinformation
Informationset ofpast prices
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Three Forms of Market Efficient Hypothesis

• Weak Form Efficient Market
• Prices reflect information set of past prices
• Random Walk
• Semi-strong Form Efficient Market
• Prices reflect publicly available information
• Strong Form Efficient Market
• Prices reflect all information relevant to a stock