Univrsity Of Tehran Press Accounting and Auditing Review 2645-8020 13 2 2006 08 23 - - 18480 FA Journal Article This paper empirically investigates, in an emerging market, the role of earnings and book value in equity valuation and uses in the analyses a sample data of 226 Iranian manufacturing firms listed on Tehran Stock Exchange (TSE) for the period of 1991 to 2004. Employing after-tax earnings and beginning-of-year equity book value, both on a per share basis and deflated by the General Consumer Price Index, the paper provides evidences on the negative price-earnings relation and on the role of equity book value as a proxy for the abandonment option value when the firms report losses. Our work contributes in the market-based accounting literature at least in two ways: first, it provides evidence on the equity valuation research in an emerging market with the findings of negative price-earnings relation; and second, it is able to detect the abandonment option role of equity book value by applying in the analysis a proxy for the abandonment option value available to stockholders. This paper empirically investigates, in an emerging market, the role of earnings and book value in equity valuation and uses in the analyses a sample data of 226 Iranian manufacturing firms listed on Tehran Stock Exchange (TSE) for the period of 1991 to 2004. Employing after-tax earnings and beginning-of-year equity book value, both on a per share basis and deflated by the General Consumer Price Index, the paper provides evidences on the negative price-earnings relation and on the role of equity book value as a proxy for the abandonment option value when the firms report losses. Our work contributes in the market-based accounting literature at least in two ways: first, it provides evidence on the equity valuation research in an emerging market with the findings of negative price-earnings relation; and second, it is able to detect the abandonment option role of equity book value by applying in the analysis a proxy for the abandonment option value available to stockholders. https://acctgrev.ut.ac.ir/article_18480_d2578800f123abbf564c84ae21dc4de9.pdf