Essay --

DanielleFirst, efficient market theory implies that the market in full reflects the available information and react quickly to any new information. In fact, impregnable or bad news related to reported profits income is usually evaluated rationally by investors and directly reflected the market share wrong. Indeed, on a lower floor an efficient market, this reflected market price will meet the price predicted by the investors and that why in some cases we notice no reactions to the earning performance whether it is good or bad.Second, sometimes in that respect no considerable or so far a reversed reaction to change in the stock price for the news related to reported sort out income and that is due to an other grammatical case rather internal or external taking place in the same period that affects the market behaviour towards the investors behaviour. To illustrate, if a company working in gas and petroleum industry can have a decrease in its stock price because of a new en vironmental low (future expenses) take down with the release of a higher net income.Finally, there is also the fact that the investors have certain expectation toward the upcoming net income but in case that the reported net income doesnt overcome their expectations , even though the income is positive, investor wont react to these news .In fact, a company that posts a very impressive earnings performance, but its stock price precisely moves because the investors had already expected these results and the reported net income just confirm these expectations.RobertThe ineffective market hypothesis consists on a market behaviour that sometimes drive asset prices above or below their true value. In fact, the existence and magnitude of certain stock price variations are sometimes incompatible with an eff... ...te earnings and in this situation, investors can have an idea almost the level of accrual persistence so they can take the high hat decision towards that.Applying the Accounti ng principles framework would be an efficient way to enlarge the persistence of accruals.To illustrate, the timely recognition and mesurebility of accruals would decreae the anomalies especially if they are implemented and divulge to the public using the right method.The non cash assets and the non cash liability such(prenominal) as goodwill and future tax obligation are much easily to manipulate than the cash flow. In fact, in order to augment the accruals persistence, these non cash flows items show follow a certain regulation. Indeed, Accounting provision for impairment related to any decrease in value of these items or any possible loss but also posing a restrictive rule for any possible gain.