As indicated earlier, a key defining feature of an efficient market is

the swiftness with which the market processes new information in

order that they are reflected in stock prices.
Noteworthy also is the fact that the primary product of Accounting
and financial reporting is Information, and on the basis of this
information do market participants make investment and other
decisions.
In regard of this, the information released by firms to the Market
through financial reporting can to a great extent make or unmake the
efficient functioning of the market (William Scott, 2003).
Influence of Financial Reporting on an Efficient Market:
Provide information to users especially stockholders , investors
and/ potential investors.
Because managers are allowed flexibility in choosing
accounting procedures they are able to mislead the stock market
substantially through creative reporting (E.g. Enron case).
Managers can cause their corporations shares to be overvalued
by inflating reported earnings.
the result is that the stock market cannot discriminate between
efficient and less efficient corporations and price their shares
appropriately.
At End, market participants may act on wrong information
which have no future prospects as portrayed earlier on.
Securities market efficiency has important implications for
financial
Reporting:

 One implication is that it leads directly to the concept of full

disclosure. Efficiency implies that it is the information content
of disclosure, not the form of disclosure itself, that is valued by
the market.
Efficient securities market theory also alerts us to what is the
primary theoretical reason for the existence of accounting,
namely information asymmetry.
Third, market efficiency implies that firms should not be overly
concerned about the naive investor--that is, financial statement
information need not be presented in a manner so simple that
everyone can understand it. (IAS understandability) ((Beaver,
1973 cited in Scott, 2003)
No inherent right to survive in the competitive market place for
information
I.e. accountants are in competition with other providers of
information, such as financial analysts, media, disclosures by
company officials, and so on.
Thus, if accountants do not report useful, cost-effective information,
we would expect that the usefulness of the accounting function would
decline over time as other information sources takeover.
(Beaver, 1973 cited in Scott, 2003).