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We show that continued reliance on firms' book-to-market ratios (B/M) in value investing, despite evidence of increasing noise in B/M, has wide-ranging effects on firms, market outcomes, and investment fund performance. Our study is motivated by the fact that major US stock indexes and institutional funds continue relying on B/M when identifying value stocks and selecting index weights. Consistent with this reliance shaping market outcomes, we find firms' stock returns and trading volumes comove with B/M-peers (ie, firms with similar B/M) in excess of their fundamentals, particularly among stocks held by value-oriented funds. Firms misidentified as value companies based on B/M also appear to have lower costs of capital. Finally, we show that investment funds that disproportionately rely on B/M earn predictably lower returns.