Financial statements are extensively used by shareholders to evaluate the economic value of firms based on the assumption that accounting numbers have a certain relationship with stock prices in the market. However, the nature of the relationship between accounting numbers and market values of the firms for this reason, especially in emerging markets, has yet to be found out with any degree of confidence. This paper investigates the empirical relationship between equity share prices and book value per share, earning per share of Indian commercial banks and examines whether there is significant difference in the value relevance of accounting numbers between private and public sector banks listed on Bombay Stock Exchange in India for the period 2004 to 2016 by using price valuation model provided by Ohlson (1995). 

Findings of our study revealed: 1) earnings per share (EPS) and book value per share (BVPS) jointly and independently have significantly positive relationship with market share price of public sector banks, private sector banks, and all banks; (2) The incremental information content of BVPS is greater than that of EPS in public sector banks. While in private sector banks, EPS add more to the overall explanatory power of the model than BVPS. (3) The common explanatory power of EPS and BVPS is greater in public sector banks. (4) Overall empirical findings reported that Value relevance of earnings and book value jointly is moderately higher in private sector banks than that of public banks with the adj  of 38% and 35.5% respectively for the period of the study. (5) Value relevance of earnings per share and book value per share individually and jointly have increased over the period of the study in private sector banks as well as public sector banks. Finally, it is suggested that for the banking sector as a whole, book value per share is more relevant than the earnings per share.

KEYWORDS: value relevance, earnings, book value, public sector banks, private sector banks