Because of the efficient-markets hypothesis, the impetus for increased disclosure with less concern for choice among accounting alternatives has grown stronger.

Question

Quizplus · Accepted Answer

The efficient-markets hypothesis suggests that financial markets quickly and accurately incorporate all relevant information about a company, meaning that any accounting choices made by the company will not affect the stock price. This has led to increased pressure for companies to provide more detailed and standardized disclosures, as there is less concern about the impact of accounting choices on investors' perceptions.

Because of the Efficient-Markets Hypothesis, the Impetus for Increased Disclosure