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Testing Weak-Form Efficiency of Chinese Stock Market
Finance & Accounting
Pages 5 (1255 words)
LITERATURE REVIEW The Literature in General The present corpus of literature on market efficiency is quite extensive. This is probably because stock markets are essential components of modern economic systems. Hence, one can find many studies that provide general background and specific themes addressing relevant issues today.
A specific concern of this review involves the weak-form of market efficiency. Ho and Lee (2004) provided deep insights in this aspect, outlining background information as well as an outline of empirical evidences that defined, explained and determined weak-form efficiencies in stock market such as those in the United States. Chandra (2008, pp.423) also explained relevant hypotheses such as how current price of a stock reflects all information found in the record of past prices and volumes, which is translated to the argument that past and future price movements are not related. A very important aspect in the existing literature on stock market efficiency is the testing process and methodology. This makes sense because in order to determine the performance and output of a specific stock market, it must be assessed or tested for efficiency. In this regard, numerous studies were undertaken. For instance, the works of Campbell, Lo and MacKinlay (1997) as well as Barber and Lyon (1997) and Loughran and Ritter (2000) demonstrated and examined the conventional strategies for testing performance under normal economic conditions. The information provided by Preston and Collins (1966) is quite helpful for this study. The researchers outlined the criteria by which stock market efficiency could be appraised. ...
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