ABSTRACT
The chapter is structured as follows. We commence by reviewing the understanding of asset pricing and market efficiency that is upheld in modern finance theory. This leads to a discussion of the Global Financial Crisis (GFC) and the destruction of individual and corporate wealth that had relied on price discovery in orderly markets. We then highlight the adverse reaction to the concept of efficient markets as an outcome of the GFC. This is followed by a review of economic theory that had warned of the innate dynamic of unsustainable bubbles and dysfunctional cycles in the economy, warnings that modern finance theory has chosen to ignore. The final section of this chapter concludes with a consideration of the implications for accounting measurement seeking to avail of market pricing as an arbiter of value in corporate financial reports.
