The 2008 Revision to Market Value of
Quoted and Unquoted Shares of
Corporate Equities in the U. S. Flow of
Funds Accounts
Prepared by Susan Hume McIntosh
and Elizabeth Ball Holmquist
Working Party on Financial Statistics
November 2, 2009
OECD, Paris
Relative Importance of Unquoted
Shares
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2
.
Revision to Market Value of
Corporate Equities
3
Previous Method
and the Upward Revision
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4
Last benchmark 2000:Q4, perpetual
inventory method equation using DJ Total
Market Index and net equity issuance
Use Wilshire 5000, adds over $600 billion
Net change in shares outstanding
Closely held benchmarked to estate tax
return data, moved by index
Shift to larger proportion of closely held
shares
Publicly Traded Firms
New Method
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5
Gross market value=share prices x shares
outstanding using firm-level data from CRSP
ADRs and listed companies incorporated
outside U.S. are excluded
Preferred stocks benchmarked to data from
Standard and Poor’s for 2007:Q1
Intercorporate holdings of nonfinancial
companies excluded using Compustat data
Closely Held Firms
S-corpoations - 1
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6
For 2006, 3.8 million returns, $3.0 trillion in
assets, $851 billion in net worth
65% of market value of closely held firms
Uses aggregate net worth from IRS Statistics of
Income (SOI) tax data with 2 year lag
14 industry classifications
Average historical growth rates by industry of net
worth used for most recent periods
Annual net worth converted to quarterly using
linear interpolation
Closely Held Firms
S-corpoations - 2
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7
Calculate ratio of summed market value to
summed net worth for public companies, by
industry, quarterly from Compustat data
S-corps market value = S-corps net worth x
market-to-net worth ratio of public companies
Sum S-corps market values of 14 industries
Latest periods use Russell 2000 index
Downward liquidity adjustment of 25%
Closely held firms
C-corporations - 1
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8
35% of market value of closely held firms
List of private C-corps with revenue greater than
$1 billion from Forbes
For 2008, 441 private C-corps
Information available from Forbes includes
revenue, industry classification, and number of
employees
Annual revenue held constant for each quarter
of the year
Closely held firms
C-corporations - 2
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9
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Match each private C-corp with a public firm that
has a similar industry and revenue profile using
Compustat data
Compute market value-to-revenue ratio for all
comparable public companies
Market value of private C-corps = revenue of
private C-corps x market-to-revenue ratio of
public companies
Use DJ total market index for latest quarters
Downward liquidity adjustment of 25%
Market Value of Corporate Equities
in the U.S.
10