The Wealth of Corporations: Why Firms Have Zero Net Worth and Why It Matters

• Published in: Economic and political weekly
• Main Authors: Roth, Steve, T Sabri Oncu
• Format: Journal Article Magazine Article
• Language: English
• Published: Mumbai Athena Information Solutions Pvt. Ltd 11.07.2020
• Subjects: Accounting; Balance sheets; Book value; Economists; Equity; Households; Liability; Market prices; National income and product accounts; NIPA; Stockholders; Greece; United States > US
• ISSN: 0012-9976

The asset value of outstanding shares is vastly larger than firms’ book value, shareholders’ equity—the bottom line balancing item on the liability side of firms’ balance sheets. [...]the IMAs post firms’ equity liabilities to their balance sheets as just another liability—not broken out as a singular item as in corporate reports. [...]The IMAs post firms’ equity liabilities not at book value, but at market value. All liabilities are inherently financial; the debt is due to some entity, which holds that obligation as an asset on its balance sheet. 2 multpl.com/s-p-500-price-to-book. 3 dallasfed.org/research/econdata/govdebt.cfm#tab2. 4 Renamed the Transactions tables as of June 2018, with the following note (emphasis added): As of this publication, the term “flow” is being replaced by the term “transactions.”