Example of the efficient market hypothesis

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On January 17, 2016 , a publicly -traded company (hereinafter referred to as the "Company") held a stockholders' earnings conference call and announced that they had earned revenue equal to $1.07 per share of common stock. Upon analysis by 16 stock analysts, it was expected that on January 17, 2017, the Company would earn revenue equal to $1.22 per share of common stock, an increase of $0.15 per share. On January 17, 2017, the Company announced that their earnings for the year was $1.21 per share, or a $0.14 increase per share over the previous year. On January 18, 2017, the Company's stock price fell from $48.71 to $34.53 (a $14.18 decrease in the value of the stock).

Explain how this could be shown as an example of the Efficient Market Hypothesis, AND how this could be shown as an example of a violation of the Efficient Market Hypothesis.

Reference no: EM131432612

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