Davis,Fama,and French (2000)created three B/M ratio groups.The firms with a high B/M ratio are often called

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Davis, Fama, and French (2000) created three B/M ratio (book-to-market ratio) groups based on the ratio of the book value of equity to the market value of equity. The firms in the high B/M ratio group have a high book value compared to their market value, indicating that they are undervalued by the market, hence called "value firms." On the other hand, firms with low B/M ratios are called "growth firms" as they have a high market value compared to their book value.

Davis,Fama,and French (2000)created Three B/M Ratio Groups