Company A, a listed company in ASX shocked investors on Friday by warning t=
hat June-half earnings were expected to fall by 15 per cent. Company A=92s =
shares have since fallen 20 per cent, to their lowest level since July 2019=
and closed at $9.09 on Tuesday. Company A has been unable to recover highe=
r costs in Australia because of aggressive pricing in supermarkets and weak=
er sales in the higher-margin route trade. Earnings for Company A in South =
East Asia are also expected to fall this year because of increased competit=
ion from new rivals, rising labour and fuel costs and currency depreciation=

a) Based on the Efficient Market Hypothesis (EMH), explain how capital mark=
ets research would describe the reaction of the market to the Company A pro=
fit warning announcement.
b) Do you think that an =91information transfer effect=92 will flow from th=
e news about Company A profit downgrade? Explain with examples.