Where the buck stops

Risk management units alone cannot avoid the damage from periodic bouts of irrational exuberance. That responsibility lies with the chief executive, argues David Rowe

The efficient markets hypothesis (EMH) argues that, in free and competitive markets, prevailing prices always reflect a process that collectively incorporates all relevant information. Like so many hypotheses in the social sciences, this one is only approximately valid. Free markets have proven time and again that they are far more efficient at guiding investment decisions than central government control or the pseudo-market model of 'crony capitalism'. Most particularly, they are far more