Professor Wyatt describes a series of transactions that he argues question the link between the implications of the EMH and the real world of accounting. He claims his evidence shows that managers dont behave as if they believed in stock market efficiency. The extract relates to his comments on off-balance sheet financing. He provides an example of the practice of using lease financing, which enabled the assets and related liabilities to be off-balance sheet and makes some assumptions about the reasons for and implications of these practices. Although this practice has been curtailed by AASB 16 Leases, we will use this case to evaluate arguments about capital market efficiency.

Required What reasons does Wyatt give in arguing that the EMH does not reflect the real world of accounting?