Question 4

Please do it well and at least 500 words

Consider the following two hypothetical statements from corporate managers. Based on your knowledge of market efficiency, which statement will you agree with? Please justify your answers with theories and empirical evidence. The word count limit for answering this question is 800 words.

a. Shareholders will never know our capital budgeting decisions.

b. Shareholders will punish the company when we have made bad capital budgeting decisions.