The new economy is resulting in much confusion concerning stock markets, according to Prof Eamonn Walsh, professor of accounting at the Michael Smurfit Graduate School of Business, UCD. "On the one hand, new firms, many in the Internet sector, with little or no profits, appear to be overvalued while older well established firms appear to be undervalued," he said.

He said that while this problem was important to firms, it also had an economy-wide perspective as capital might not be allocated in an efficient manner. Mr Walsh, who was giving a lecture to mark the inauguration by PricewaterhouseCoopers of its sponsored chair of accounting, said one way to resolve the programme was to ensure that information on prospective earnings and cash flow was available to the investment community.