The Market-to-Book Value Gap and Implications for Accounting Standards: A Case Study Based on Airbus

Mingrui Chen

doi:10.54691/bcpbm.v21i.1290

Authors

Mingrui Chen

DOI:

https://doi.org/10.54691/bcpbm.v21i.1290

Keywords:

Book value, market value, gap, reason, empirical level, accounting standards

Abstract

Book value is the value presented on the balance sheet. In contrast to book value, which reflects the past value, market value is based on the current value of the enterprise and includes all price influencing factors in the market. An accurate valuation of an enterprise is critical to making correct investment decisions. The gap between the book value and market value of an enterprise can lead to deviations in enterprise value valuation, which can affect the judgment of financial statement users. However, the current accounting standards cannot meet such decision-making needs of information users and need to be improved in the future reform. The purpose of this paper is to analyze the reasons for the gap at the empirical level and to assess the implications for the reform of accounting standards.

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