Stock Market Efficiency and Economic Efficiency : Is There a Connection ?

@inproceedings{Dow2008StockME,
  title={Stock Market Efficiency and Economic Efficiency : Is There a Connection ?},
  author={James Dow and Gary B. Gorton},
  year={2008}
}
In a capitalist economy, prices serve to equilibrate supply and demand for goods and services, continually changing to reallocate resources to their most efficient uses. However, secondary stock market prices, often viewed as the most "informationally efficient" prices in the economy, have no direct role in the allocation of equity capital since managers have discretion in determining the level of investment. What is the link between stock price informational efficiency and economicefficiency… CONTINUE READING
Highly Influential
This paper has highly influenced a number of papers. REVIEW HIGHLY INFLUENTIAL CITATIONS
Highly Cited
This paper has 119 citations. REVIEW CITATIONS