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The following graph shows the behaviour of average cumulative abnormal return for a sample of companies that announced negative earnings forecasts. It presents daily cumulative
The following graph shows the behaviour of average cumulative abnormal return for a sample of companies that announced negative earnings forecasts. It presents daily cumulative abnormal return for 21 days, from day -10 to day + 10 where day O is the earnings forecast announcement day. 0.005 -10 0 5 10 15 -0.005 Cumulative abnormal return -0.01 -0.015 -0.02 Day relative to announcement day Explain whether the behaviour of cumulative abnormal return in this graph is consistent with the efficient market hypothesis. If not, explain what behavioural bias/critique is reflected in the above graph
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