How has the Efficient Market Hypothesis influenced corporate investment strategies?

The Efficient Market Hypothesis (EMH) has significantly influenced corporate investment strategies. It has led to the belief that it's nearly impossible to consistently outperform the market, as all available information is already reflected in a stock's price. This has encouraged a shift towards passive investment strategies, such as index funds, which aim to mirror the performance of a specific market index rather than trying to beat the market. Additionally, it has influenced corporations to be more transparent and timely in their information disclosure, as the EMH assumes that all relevant information is readily available to all market participants.

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The Efficient Market Hypothesis or EMH assumes that people are rational actors who buy and sell a stock based on what it is worth, and that a stock's price therefore reflects all available information at any given moment. EMH says that the reason professionals rarely 'beat the market' is because the price always adjusts as soon as new information is available.

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