Shareholder's equity is (assets - liabilities), in case the market value of its share goes down, the value of equity held by shareholders goes down, Isnt it a paradox?



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Shareholder's equity is (assets - liabilities), in case the market value of its share goes down, the value of equity held by shareholders goes down, Isnt it a paradox?

1 Answer(s)


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There is no connection between the shareholders equity in the balance sheet and the market value of shares.

These 2 are independent of each other.

The balance sheet shareholders equity is determined by fundamentals.

The market price of shares is determined by other factors as well like macro economic etc