Business Terms Glossary
Common Stock
Definition of Common Stock
Common stock is a share in the ownership of a corporation.
Typically held by founders and employees, common stock defines the holder's equity interest in a company.
In the case of a public company, the stock is traded between investors on public exchanges. Common stock in private companies is considered illiquid relative to common stock in public companies.
Owners of common stock have various rights. For example, they may be entitled to vote for company directors.
In some cases, common stock holders will receive dividends on their holdings. Investors who purchase common stock hope that the stock price will increase so the value of their investment will appreciate.
Common stock offers no performance guarantees per se. In the event that a corporation is liquidated, the claims of secured and unsecured creditors and owners of bonds and preferred stock have precedence over the equity claims of those who own common stock.
Common Stock References On This Site
These Gaebler.com articles mention this glossary term:
- Section 1224 Elections - Additionally, the stock must be common stock issued by a domestic corporation in exchange for cash...
- What Type of Business Entity Should You Form? - C corporations allow you to sell your common stock shares, but LLC�s often do not have common stock for sale...
- Subordinated Debt - Lenders of subordinated debt have priority over only common stock holders in the reimbursement schedule...
- Startup Equity Financing and Debt Financing - In this example, let's say that the founders have one million shares of common stock. So, the equity investor is granted one million new...
- Interview with Furniture Entrepreneur Lauren Russell - In 2007 we sold about 15% of our common stock in an offering to family and friends. We are...
- How Much Money Should Company Founders Get? - When it comes to getting shares from the company's common stock, founders prefer to use a vesting schedule to determine...
- Subordinated Debt - Lenders of subordinated debt have priority over only common stock holders in the reimbursement schedule...
- How Much Money Should Company Founders Get? - When it comes to getting shares from the company's common stock, founders prefer to use a vesting schedule to determine...
- What Type of Business Entity Should You Form? - C corporations allow you to sell your common stock shares, but LLC�s often do not have common stock for sale...
- Section 1224 Elections - Additionally, the stock must be common stock issued by a domestic corporation in exchange for cash...
- Startup Equity Financing and Debt Financing - In this example, let's say that the founders have one million shares of common stock. So, the equity investor is granted one million new...
- Interview with Furniture Entrepreneur Lauren Russell - In 2007 we sold about 15% of our common stock in an offering to family and friends. We are...
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