Common stock
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Common stock is a form of corporate
The owners of common stock do not directly own any assets of the company; instead each stockholder owns a fractional interest in the company, which in turn owns the assets.
Since common stock is more exposed to the risks of the business than bonds or preferred stock, it offers a greater potential for capital appreciation. Over the long term, common stocks tend to outperform more secure investments, despite their short-term volatility.[1]
Owners of a company's common stock are entitled to rights that are enumerated in its articles, bylaws and applicable corporate law. These can include the right to vote on directors, officers, compensation plans and major business actions such as acquisition or dissolution. Many companies also allow them to submit and vote on proposals to amend the bylaws or to mandate actions by the board. Pre-emption rights and shareholder rights plans regulate the terms under which new shareholders can affect the interests of existing ones. Shareholders have the right to request access to the company's financial records, the list of shareholders, and other records that they legitimately require to fulfill their ownership duties.[2]
Classification
Common/Equity stock is classified to differentiate it from preferred stock. Each is considered a
Ownership rights
Common stocks exist on both public and private markets, however the accessibility differs due to the fact that only
Common stock
See also
- Capital surplus
- Common stock dividend
- Equity (finance)
- Share capital
- Shares authorized
- Shares issued
- Treasury stock
References
- ^ a b "Common Stock". Investopedia.com. ValueClick. Retrieved 2013-05-12.
- ^ Milman, David (2018). The Company Share.
- ^ "An Empirical Analysis of Common Stock Delistings". Cambridge University Press. Retrieved 12 April 2023.
- JSTOR 2326082. Retrieved 12 April 2023.