Stockholders' Equity Law and Legal Definition

Stockholders equity is the residual interest in the assets of an entity after deducting its liability. That is the equity stake currently held can be termed as the stockholders equity. Stockholders equity is also known as shareholders' equity.

The stockholders equity is derived mainly from two sources:

1. the money that was originally invested in the company, along with any additional investments made thereafter; and

2. retained earnings that the company is able to accumulate over time through its operations.