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Market Value, Book Value and Earnings: Is Bank Efficiency a Missing Link ?

Mehreen Ishtiaq () and Naeem Ullah ()
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Mehreen Ishtiaq: Foundation University Rawalpindi Campus
Naeem Ullah: Foundation University Rawalpindi Campus

Hyperion Economic Journal, 2014, vol. 2, issue 1, 38-45

Abstract: The purpose of this study is to examine that the earnings components and banking efficiency are relevant to the market value of the banks or not. Testing the relationship we used DEA for the banking efficiency and regression model is estimated because it is panel study we used Common effect, fixed effect and random effect on the Pakistani banks included in this study. Frequency of data is yearly and is started from year 2008 to year 2012. Findings of our study gives number of directions, first of all in analysis it is found that the components of earnings are related to market value of the banks, secondly cost efficiency adds the additional information to the market. It can be concluded that earning’s components and operational efficiency both explain the market value further these results suggest that stock prices reflect both the information generated through market as well from the accounting System. This study helps to explain the market value of the shares through banking efficiency and accounting information. According to our best knowledge this study is unique among the studies because it is the first study in the emerging economy which explains the market value through earnings components and efficiency of the banks

Keywords: efficiency; earnings components; market value; book value; panel study; banks (search for similar items in EconPapers)
Date: 2014
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Handle: RePEc:hyp:journl:v:2:y:2014:i:1:p:38-45