The efficient market hypothesis explains the random walk hypothesis suggesting that stock prices are independent of each other, hence, it is impossible to earn abnormal profits. The positive effect of a well-functioning and highly efficient stock market on the performance of an economy motivated the Philippine Stock Exchange to pursue massive modernization initiatives. This research provides evidence of the existence of random walk in the Philippine stock market employing the Augmented Dickey-Fuller (1981) and Phillips-Perron (1988) unit root tests, the Lo-MacKinlay’s (1988) conventional variance ratio test, and Chow-Denning’s (1993) simple multiple variance ratio test. Results of the ADF and PP unit root tests confirm the necessary condition for a random walk. The Chow-Denning (1993) maximum /z/ statistic and the Wald test statistic as in Richardson and Smith (1991) for the joint hypotheses and the Lo and MacKinlay (1988) individual statistics variance ratio test generally accepted the null hypothesis of a random walk. That is, the unit root and variance ratio tests consistently indicate that the null hypothesis of random walk cannot be rejected. The existence of a random walk in weak-form efficiency can be attributed to market liquidity as a result of continuous development and modernization of the Philippine equity market.

Abstract
1. Introduction
2. Theoretical Foundation
3. Literature Review
    3.1. Using as Basis of the Unit Root Tests
    3.2. Using as Basis of the Variance Ratio Statistics
4. Research Methodology
    4.1. Unit Root Tests
    4.2. Variance Ratio Test
5. Results and Discussion
    5.1. Descriptive Statistics
    5.2. Unit Root Tests
    5.3. Variance Ratio Tests
6. Conclusions
References

• Abraham C. CAMBA Jr.(Department of Economics, College of Social Sciences and Development, Polytechnic University of the Philippines) Corresponding Author
• Aileen L. CAMBA(Department of Economics, College of Department of Economics, College of Philippines)