The Effect of the Asymmetric Information on the Asset’s Price and the Strong Efficient Market Hypothesis

Abstract

The research’s hypothesis is that the existence of material private information leads to the asymmetric information problem and partially invalidating the strong efficient market hypothesis theory. According to the researcher, due to the asymmetric information the asset could be not considered “fairly” priced until the private material information has been transferred to the public market and consequently eliminating the asymmetric information and the possibility of extra return respect to the market due to the privileged information. Keywords: asymmetric information, Strong Efficient Market Hypothesis, 2008 financial crisis, fair price, asset price.