Subsequent to Feltham and Ohlson 1995 and Ohlson 1995, the accounting literature has published a large numbers of papers on accounting data and value.1 A review of this literature reveals that many themes and insights recur across the papers. With the advantage of hindsight, the repetitions seem inefficient. A student who takes a stab at familiarizing herself with subject matter naturally tends to view such a state of affairs as less than ideal. Questions like “What is it that I really need to understand?” or “Taken in its totality, what ideas and results make the literature tick?” arise. This paper addresses the essence of such questions. It states the central results as eight simple formal propositions. Because all the propositions are freestanding, they can, at least in principle, be internalized independently of each other. But the sequencing is in fact relevant because it introduces step-by-step increasingly sophisticated concepts. The concepts build upon each other; the propositions’ analytical simplicity should, therefore, not be taken as a sign that they are conceptually simplistic. Much discussion follows the propositions to spell out their broader significance. And the paper approaches this task always maintaining the texture of accounting: the central variables are earnings, book values, and dividends. The paper does not digress on proofs and finer analytical points. These aspects are of little interest, which is another way of saying that the paper focuses squarely on analytical constructs/representations and how these fit together. Nor does this paper elaborate on the extent to which the literature has already dealt with the results or insights. There is no question that most, if not all, results have had some kind of presence and thus lack novelty. That said, such cataloguing and related discussion would have been long and tedious without facilitating a better understanding of the insights I wish to convey. Aside from trying to systemize the literature, and thereby making it more accessible to the average reader, the paper also has a more ambitious objective. It goes to the heart of subject matter: the exposition should give the reader the sense that all pieces and insights interrelate logically and conceptually. In other words, the task at hand is to go beyond a listing of useful results (though this should hopefully be the case, too), and instead give a sense of how the various pieces coalesce into a whole. The development of such a coherent mental map allows the reader to think of the broad literature in an integrated fashion, rather than as consisting of loosely connected, or even competing, models that primarily differ in their empirical
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