Some of this theoretical work has been criticized for belaboring "a very simple idea.. .with
no economic context" (Verrecchia 1998). While this line of theoretical research can seem
deceptively simple, I believe it is difficult to overstate its importance as a guiding framework
for empirical capital market research. As I discuss in the next section, when it comes
to the design of empirical tests, a good understanding of the RIM is crucial.