Tests of the strong-form EMH include studies of corporate insiders.

Question

Quizplus · Accepted Answer

Studies of corporate insiders are indeed used to test the strong-form of the Efficient Market Hypothesis (EMH), which posits that all information, public and private (including insider information), is already reflected in stock prices, making it impossible to consistently achieve higher returns. Insider trading studies help to evaluate if insiders can consistently earn abnormal returns, which would contradict the strong-form EMH.

Tests of the Strong-Form EMH Include Studies of Corporate Insiders