Sample Thesis Paper
Kothari and Shanken (2003) determined to make conclusive analysis on the information collected on the area of using financial statements items to predict the movement of stock prices developed a comprehensive empirical analysis of many previous studies in the area and tested the data used in such findings. Using a rigorous statistical analysis, they identified that the financial statements items had a relationship with the stock market values. These findings are giants the efficient market hypothesis which would predict that the use of present or historical information should not yield much in the prediction of the movements of the stock prices. Kothari and Shanken (2003) also demonstrated that the relationship could be described using a mathematical model. This indicates that although qualitative information is critical in the relationship between the book value and the market value of a company, the quantitative information is also critical. This seems to confirm the rationality principle in economics.
Bartholdy et al (2004) also conducted a study the relationship between the book value and the market value was the major issue. The book value also incorporated some elements of the intangible assets. Using a large sample of listed companies in Singapore, Bartholdy et al (2004) identified that there was a statistically significant relationship between the book value and the market value of the companies. The study also revealed that the relationship was more significant in some industries that n in other revealing that there might be industrial factors that also impact on the relationship. The measurement of the intangible assets was the major limitation in the analysis since subjectivity was applied in some instances.
Cook et al (2004) did a study investigating the relationship between the tangible book value and the market value of five of the biggest Japanese conglomerates. The study revealed that a relationship existed between the tangible book value and the market value of the companies. However the relationship was weak indicating that there were other factors that influenced the market values other than the tangible book value. The study also revealed that the relationship was positive. The higher the amount of tangible book values, the higher was the market values of the company’s shares.