Inefficient market

(redirected from inefficiencies)
Also found in: Dictionary, Thesaurus, Legal.
Related to inefficiencies: Inefficiencies in the Market

Inefficient Market

A market where prices do not always reflect available information as accurately as possible. Inefficient markets may result from a lag in information transferring to one place to another, deliberate withholding of information by an insider, or other reasons. Inefficient markets give rise to arbitrage opportunities. Most analysts believe that no market is perfectly efficient and that some inefficiency is inevitable. See also: Efficient Markets Hypothesis.

Inefficient market.

In an inefficient market, investors may not have enough information about the securities in that market to make informed decisions about what to buy or the price to pay.

Markets in emerging nations may be inefficient, since securities laws may not require issuing companies to disclose relevant information. In addition, few analysts follow the securities being traded there.

Similarly, there can be inefficient markets for stocks in new companies, particularly for new companies in new industries that aren't widely analyzed.

An inefficient market is the opposite of an efficient one, where enormous amounts of information are available for investors who choose to use it.

Mentioned in ?
References in periodicals archive ?
I'm sure there are many Journal readers who could regale us with tales of corporate inefficiencies, even in the most British of organisations.
The offering is tailor-made, aimed at tackling market inefficiencies, saving funding costs and reducing overhead costs.
The bottom-up inefficiencies arise because, in addition to too few trades taking place, the wrong trades are also likely to take place.
The decrease was once again due to reduced sales volumes, launch inefficiencies and new facility costs as explained above.
This is the area where the greatest inefficiencies exist.
Flavin and Durning offer incentives and guidelines for tackling these inefficiencies in their report.
This lack of focus is a major factor in chemical deposits, chemical inefficiencies, lowered machine efficiency, and poor product quality.
The MTA said a draft audit of a financially troubled union-run benefits fund shows that $1 million a year in taxpayer money is being wasted because of inefficiencies - claims the union disputed Wednesday.
This paper uses a profit maximization framework and develops a generalized profit function approach that accommodates both technical and allocative inefficiencies in the context of a panel data model.
Nasdaq-NNM: PLSE) said today that, because of manufacturing inefficiencies at Pulse facilities in the People's Republic of China (PRC), the company's fourth quarter results are expected to show a loss, although the company expects to record net earnings for the 1994 fiscal year.
TQM and CQI philosophies identify that the most significant and costly inefficiencies are due to faulty systems and processes, not individuals.
In response to costs, inefficiencies and over-reporting resulting from initial SOX compliance activities, the SEC and the PCAOB have proposed improvements to current regulations, focusing internal control audit on matters that present the greatest risk of a material misstatement and emphasizing the higher risk stages of financial statement preparation such as the period-end close process.