Why doesn't stockholders' equity equal the market value of equity?

Question

Quizplus · Accepted Answer

The use of historical cost accounting and the expensing of value-generating costs such as research and development and advertising impact the reported value of stockholders' equity on the balance sheet, which may not reflect the market value of equity. Additionally, investors may have varying perceptions of a company's future prospects and, therefore, may be willing to pay more or less than the current reported value of stockholders' equity, resulting in a difference between stockholders' equity and the market value of equity.

Why Doesn't Stockholders' Equity Equal the Market Value of Equity