Companies with Market Value below Book Value Are More Common in Europe than in the U.S.: Evidence, Explanations, and Implications

This paper examines listed companies in the US and Europe with market capitalizations less than the book value of equity in the years immediately before and after the global financial crisis of 2008. The paper documents a higher percentage of companies in the (European) STOXX 600 with market capitalization less than book value than in the (US) S&P 500. Further, the negative difference between market and book value is larger for European companies and more persistent over time. The paper seeks explanations for the differences.

Whole or partial funding for this paper has been generously provided by KPMG's Global Valuation Institute.