The closest thing to a true or objective value that any stock has is its ability to pay a dividend.  But this isn't what today's investors are interested in.  When was the last time you heard any of your day-trading friends brag about the nice dividends they were paid?

Dividends are almost by nature too small to produce the kinds of returns contemporary investors are looking for.  We demand a more rapid rate of capital appreciation. 

These larger increases are possible only in stock sales prices.  Corporate earnings do factor into stock sales prices--but typically, these days, only as a jumping-off point.

For example, if a major technology company fails to meet its earnings projections, its stock price will likely decline to a substantially greater degree than could be explained just on the basis of lost dividend income.  Not only that, but other technology stocks will also tend to see their prices decline in reaction to the news.  

Such broad fluctuations usually cannot be explained on the basis of any direct, fact-based reasoning regarding specific companies' profits.   Instead, they reflect a more generalized mood or "sense of the market" regarding technology.  They are rooted in perceptions.

As are, ultimately, virtually all stock prices in an environment where the expectation of gain is based on increased resale price rather than on payment of a dividend.   

It is not at all uncommon for these perceptions to trump reality.  A company can post good, solid earnings and still see its stock take a nose dive, if its actual performance fails to live up to expectations that had been building about it.

Conversely, accounting tricks can make a company look far better than it actually is.  While Enron is the most dramatic example of this principle to date, it is by no means the only company to engage in accounting  practices that ultimately serve no purpose other than perception management. 

For example, a company can boost its earnings per share by the simple accounting device of buying back stock, which leaves fewer shares for the earnings to be spread across.    The high earnings-per-share number tends to spawn perceptions that the company is doing well, and these perceptions  can in turn make the stock "hot," boosting share prices out of all proportion to actual profitability.   The "hotter" the stock gets, the more people are willing to pay for it--until ultimately, the price has almost nothing to do with profitability, and almost everything to do with a herd mentality.

How can vast sums of money depend on such insubstantial and, at root, emotional factors?  If in the end, all this tends to register a bit uncomfortably like group psychology operating unrestrained in a hall of mirrors...well, welcome to the virtual reality of the capital markets.