This study sheds a new light on the role of the change in price-to-book ratio (PB) relative
to the level of price-to-book (P/B) ratio in predicting stock performance. A simple portfolio return
analysis shows that the PB is a more effective investment heuristic than the P/B ratio. The
contemporaneous panel regression with fixed and random effects discloses that both the PB and
the P/B ratio are positively and significantly related to stock returns. The proxy panel regression
with fixed and random effects holds that the P/B effect becomes contrarian, while the PB effect
remains positive.
주제어：Value Determinants, P/B Level, P/B Change, Systematic Risk