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Research Paper | Management | Zimbabwe | Volume 4 Issue 9, September 2015

Random Walk Hypothesis: Evidence from Market Efficiency of the Zimbabwe Stock Exchange

Owen Jakata ^[4] | Patience Hlupo | Cliff Gondo

Abstract: This study examined whether the share prices of companies listed on the Zimbabwe Stock Exchange follow the Random Walk Hypothesis. The research was motivated by the fact that investors are interested in knowing whether past share prices have a propensity to forecast future share prices. The period covered by the research was January 2014 to December 2014. The main objective of the study investigated the possibility that share prices follow the Random Walk Hypothesis. The data was analysed using the Chi-square Test, the Runs Test and the Auto-correlation Test. The findings showed that changes in share prices on the ZSE refute the Random Walk Hypothesis. The study concluded that share price shifts follow some pattern or trend and that historical price changes can be used to predict future price movements. The study also concluded that the ZSE provides an opportunity for investors to create wealth as they take advantage of its weak-form inefficiency.

Keywords: Zimbabwe Stock Exchange, Efficient Markets, Random Walk Hypothesis, Adaptive Markets Hypothesis, Weak-form inefficiency

Edition: Volume 4 Issue 9, September 2015,

Pages: 1460 - 1475