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nefficient Markets and Corporate Decisions

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Consider the comments of Brian Walker, the president of Herman-Miller North America, who was quoted in the chapter as having said: 'For dot.coms, it appears that the market has implicitly capitalized a lot of those costs. The market views their negative earnings as investments in the future. It's more difficult for a traditional Old Economy company trying to participate in the New Economy, because when it affects my earnings, it's more difficult for Wall Street to say, 'We'll give you a break on this.' Discuss Walker's remark in the context of the concept of Inefficient Markets and Corporate Decisions.

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Inefficient Markets and Corporate Decisions

Consider the comments of Brian Walker, the president of Herman-Miller North America, who was quoted in the chapter as having said: 'For dotcoms, it appears that the market has implicitly capitalized a lot of those costs. The market views their negative earnings as investments in the future. It's more difficult for a traditional Old Economy company trying to participate in the New Economy, because when it affects my earnings, it's more difficult for Wall Street to say, 'We'll give you a break on this.' Discuss Walker's remark in the context of the concept of Inefficient Markets and Corporate Decisions.

Inefficient market hypothesis contends that in an inefficient market, some securities are highly priced and others are low priced. This result because market forces sometime drive asset prices much above or below their true value. Such a situation was observed during the dot.com bubble.

From the perspective of ...

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