In a study on corporate disclosure by a special committee of the Securities and Exchange Commission, we find the following statement (1977, D6):
The "efficient market hypothesis"-which asserts that the current price of a security reflects all publicly available information even if valid, does not negate the necessity of a mandatory disclosure system. This theory is concerned with how the market reacts to disclosed information and is silent as to the optimum amount of information required or whether that optimum should be achieved on a mandatory or voluntary basis; market forces alone are insufficient to cause all material information to be disclosed.
Two questions that arise are:
a) What is the difference between efficient markets for securities and efficient markets for information? b) What criteria define "material information"?