Cluster analysis of share price: How firm characteristics relate to accounting metrics

The purpose of this paper is to improve our understanding the relationship between share price and accounting information. Much literature utilizes earnings number reflect firm value. However, revenue seems more relevant for high tech firms (Xu, Cai, & Leung, 2007), cash flow figures are informative internet companies (Romanova, Helms, Takeda, 2012). We build on notion that may map out different numbers firms. collect 629 metrics 3,365 in U.S. estimate their correlation with firms’ price. analyze these correlations find many exhibit a low earnings. Other important firms, including book value net assets, retained earnings, stock options, gain or loss items, special non recurring dividend rates. curious learn what causes anchor onto metrics, therefore perform cluster analysis group similar together along three key metrics. examine composition each capital structure, patterns, persistence operations, age, industry can influence which correlated encourage other researchers continue exploration as there interesting questions answer.