The Value Relevance of Accounting Earnings and Book Value Evidence from Six Large U.S. Listed Companies, 2021–2024
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This project examines the value relevance of accounting information by studying the relationship between market capitalization, net income, and shareholders' equity for six large U.S. listed companies over 2021–2024. The study uses 24 firm-year observations and applies descriptive statistics, Pearson correlations, and ordinary least squares regression based on the logic of Ohlson's valuation framework. The results show positive correlations between market capitalization and both net income and book equity. A model using net income alone produces an R² of 0.651, while adding book equity increases the R² to 0.765. In the combined model, book equity is statistically significant while net income is not, although net income is strongly associated with market capitalization in the simpler model. The findings are consistent with the idea that accounting information contains information relevant to equity valuation, but the small sample and cross-company differences mean that the results should be interpreted as exploratory rather than generalized to the full U.S. market.
Keywords
Book Value, Equity Valuation, Financial Reporting, Market Capitalization, Net Income, Ohlson Framework, Value Relevance