One cause of a corporation’s market value being greater than its book
value is the accountant’s cost principle. In order for an item to be
listed as an asset on a corporation’s balance sheet, the item must have
been purchased (or donated). If an item is not listed on the balance
sheet as an asset, it will not be included in a corporation’s book
value. (A corporation’s book value is the amount of stockholders’ equity
reported on the balance sheet, which is the amount of assets reported
minus the amount of liabilities reported.)
Often a corporation’s most valuable assets were not purchased and,
therefore, will not be reported as assets and will not be included in
the corporation’s book value. Think of the late Steve Jobs and the
culture he developed at Apple. He and his team, the innovative culture,
the wildly successful brand names, etc. could never be listed on the
balance sheet as assets nor directly included in the corporation’s book
value.
On the other hand, the market does recognize those attributes as
being immensely valuable. Hence the corporation’s market value was and
is greater than its book value.