Residual Equity Theory
Definition of 'Residual Equity Theory 'An accounting concept that says that common stockholders take the greatest risk when they buy into a company; therefore, they should have sufficient information about the company's financial standing and performance to make sound investment decisions. Residual equity is calculated by subtracting the claims of bondholders and preferred shareholders from the company's total assets. |
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Investopedia explains 'Residual Equity Theory 'Residual equity theory was developed by George Staubus, Professor Emeritus of Accounting at |
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