Corporate equities are shares of ownership in financial and nonfinancial corporate businesses. The category consists of common and preferred shares issued by domestic corporations and U.S. purchases of shares issued by foreign corporations, including shares held in the form of American depositary receipts, or ADRs. It does not include mutual fund shares, which are reported separately (tables F.214 and L.214).
Net issues of the nonfinancial corporate business sector include both seasoned equity offerings, or SEOs, and initial public offerings, or IPOs, and excludes any intercorporate holdings. Net issues by the rest of the world include only net purchases of foreign issues by U.S. residents. Financial sector issuance is obtained mostly from individual sector balance sheets. Funding corporations' issuance is the preferred shares issued by American International Group, Inc. to the federal government under the Troubled Asset Relief Program (TARP) and the monetary authority sector's preferred interest in American International Assurance Aurora LLC, and American Life Insurance Company Holdings LLC.
Net purchases of equities by foreigners are included in this table only if they are considered "portfolio" investment; that is, if they are purchases by a single foreign investor that will result in ownership of less than 10 percent of the outstanding equity of the issuing U.S. firm. Purchases by a single foreign investor that result in ownership of 10 percent or more of the firm's outstanding equity are considered foreign direct investment (shown on tables F.229 and L.229). Net purchases of equities by the households and nonprofit organizations sector are calculated residually.
The total value of corporate equities (table L.213) includes the market value of the shares of all corporations, both listed on exchanges and closely held, net of intercorporate holdings of nonfinancial corporations. Also included is the estimated market value of the federal government's holdings of corporate equities purchased from financial businesses under TARP and from government-sponsored enterprises. Shares traded on the New York Stock Exchange, the American Stock Exchange, and the NASDAQ Stock Market account for the majority of the total value. Only the total market value of corporate equities issued by financial corporations is available. Because equities are ownership shares and included in the net worth of corporations, they are not considered liabilities of the incorporated sectors.
Note: A memo item shows the market value of domestic corporations, which excludes intercorporate holdings.