Forecast grim as CSR earnings, share price in free fall

The article analyses the falling share prices of CSR due to worsening market conditions and how it relates to the efficient market hypothesis. The efficient market theory shows the efficiency of the financial market in reflecting the current and true potential of the stock prices of the companies.

Running head: ACCOUNTING THEORY AND PRACTICE
Accounting Theory and Practice
Forecast grim as CSR earnings, share price in free fall
Name of the Student:
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1ACCOUTING THEORY AND PRACTICE
Table of Contents
Article 1. Forecast grim as CSR earnings, share price in free fall...................................................2
Efficient Market Hypothesis............................................................................................................2
Analysis...........................................................................................................................................3
Conclusion.......................................................................................................................................3
Reference.........................................................................................................................................4

2ACCOUTING THEORY AND PRACTICE
Article 1. Forecast grim as CSR earnings, share price in free fall
The earnings of the CSR has shown a downward trend because of the low commodity
prices, which the company supplies and the weak construction market, which is affecting the
profitability, condition of the company. The CEO of the company expects that the performance
of the company may fall further if the demand for the housing falls further affecting the long-
term development and the growth of the company. The share prices of the company have been in
the free fall as the performance of the company is worsening and the future development course
associated with the company is uncertain (Hamid et al. 2017).
Efficient Market Hypothesis
The efficient market hypothesis a common theory used in the financial economics where
the theory states that the current security prices in the market reflects all the current information
about the stock such that the asset prices prevailing in the market shows all relevant available
information. The security prices prevailing in the market shows the potential price of the security
where none of the investor can potentially influence the security prices of the asset such that the
investors can earn abnormal profit from the same. The possibility of generation of consistent
Alpha by the investor is such securities is not possible. The only way possible for the investor to
earn abnormal return or Alpha is through insider’s information. The alpha shows the excess
positive return earned by the investor from a security (Jovanovic, 2018). Market timing and stock
selection skills are some of the common investment strategy followed by the investors for
investing in stocks but the same theory states that the investors cannot earn in excess of the profit
when the efficient market theory applies. The empirical evidence of such a theory states that only
developed economies where the financial market of the economies is developed and efficient can

3ACCOUTING THEORY AND PRACTICE
have such a theory practically applicable in the financial markets. Economies, which are not
having a stable and organised financial market, may not have the true current price of the stock
due to inefficiencies. There are three common form of Efficient Market Hypothesis, which are as
Weak Form Hypothesis, Semi-Strong Hypothesis and Semi Strong Hypothesis.
Analysis
The efficient market theory shows the efficiency of the financial market in reflecting the
current and true potential of the stock prices of the companies. The above articles analysed
shows the share price of CSR has fallen consistently from the last few years due to the worsening
market conditions and the profitability of the company. The same information and the reflection
of the information can be well seen by the falling share price of the company. The CEO of the
company feels that the performance of the company may further fall and that is the reason why
the share prices of the company has been falling more than what it should reflecting the forecast
and the expectations made by the investors for the particular stock. The financial market in
which the company operates can be said as well efficient reflecting the true potential of the stock
price for the company (Wang et al. 2018).
Conclusion
The above analysis for the company can be well related to the efficient market hypothesis.

4ACCOUTING THEORY AND PRACTICE
Reference
Atanasov, V., Pirinsky, C., & Wang, Q. (2018). Did the Efficient Market Hypothesis Affect
Investment Practice? Evidence from Mutual Funds.
Hamid, K., Suleman, M. T., Ali Shah, S. Z., Akash, I., & Shahid, R. (2017). Testing the weak
form of efficient market hypothesis: Empirical evidence from Asia-Pacific markets.
Jovanovic, F. (2018). Beyond performativity, how and why American courts should not have
used Efficient market hypothesis.
Wang, K. H., Su, C. W., Tao, R., & Chang, H. L. (2018). Does the Efficient Market Hypothesis
Fit Military Enterprises in China?. Defence and Peace Economics, 1-13.