Common stock is a security representing a legal claim to a percentage of a company's earnings and assets. Holders of common stock have some input into choosing company management, but do not generally have much say in the day to day operations. If the common stock is publicly traded, the company will generally be required to meet regulatory obligations such as filing audited financial reports. Holders of common stock are also offered the chance to participate in an annual meeting, where the company may share its vision for the future.
Investors may purchase common stock if they believe a company will be worth more in the future than it is valued at in the present. Common stock does not always pay a dividend. If the company goes bankrupt, common stockholders generally lose their entire investment. |
