Where the efficient markets hypothesis never took hold

By Felix Salmon
September 8, 2009
Justin's book and Cadbury's rejection of Kraft's takeover offer, it's probably worth noting that the one place the efficient markets hypothesis never took hold was in corporate boardrooms. It's commonplace for boards to say that offers significantly above the stock-market valuation "significantly undervalue the company", or somesuch -- with the clear implication that the market is not rational at all. At least when it's your own company on the line.

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In the wake of Justin’s book and Cadbury’s rejection of Kraft’s takeover offer, it’s probably worth noting that the one place the efficient markets hypothesis never took hold was in corporate boardrooms. It’s commonplace for boards to say that offers significantly above the stock-market valuation “significantly undervalue the company”, or somesuch — with the clear implication that the market is not rational at all. At least when it’s your own company on the line.

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