Shareholder equity represents the ownership value that shareholders have in a company. It is calculated by subtracting a company's total liabilities from its total assets. This figure reflects the net worth of the company from the perspective of its owners and can increase or decrease based on the company's performance and financial decisions. Shareholder equity is important for investors as it indicates the financial health of a company. It includes components such as common stock, preferred stock, and retained earnings. A positive shareholder equity suggests that a company is in a good position to grow and generate returns for its investors.