Dechow (1998) attempts to establish the statistical relationship with equity value, earnings and
book value. Collins and Kothari (1989) tries to establish the leading relationship between stock
returns, change in EPS and firmsize. Zhang and Chen (2007) discuss to establish relationship
between equity value, earnings yield, change in profitability, change in capital investment,
change in growth opportunity and change in discount rate. In this article equity value is
dependent variable, remaining variables are independent variables.
Research at the international level indicates that EPS does impact equity market value. In the
Indian context, there is no research to establish the relationship between EPS and equity market
value. Hence, the present paper aims at finding out whether EPS impacts equity market value in
the Indian context. If it affects, the next question is what is the underling relationship?