Evaluation of Stock Market Efficiency: A Case Study of Chitta gong Stock Exchange Limite

Abstract

The study is an attempt to empirically examine the form or degree of capital market efficiency for the case of Chittagong Stock Exchange (CSE) over the period June 2008 through December 2009 employing the event study methodology which tests an investment scheme that is based upon the trading on information events and the event under consideration is 'earnings announcements ', The test result shows that the degree of capital market efficiency is very low. The presence of a good number of non-actively traded shares, informational asymmetry, price manipulation, floatation of so many IPOs within a short span of time are the leading factors originating lower degree of efficiency. Careful monitoring, effective intervention by regulatory bodies, timely disclosure and dissemination of all relevant information along with other corrective measures can reduce the hesitancy of investors and a significant level of market efficiency the CSE might experience.