Corporate Stock

Corporate stock is the capital or monetary fund that a company raises through the sale of shares. Shares of corporate stock define an ownership entitlement, called an equity position, and represent a proportional claim on a company’s assets and future earnings. Ownership is determined by the number of shares of corporate stock a person owns divided by the total number of shares of corporate stock outstanding. The value of corporate stock depends on the value, profitability and future potential of the issuing corporation. Changing market conditions also dictate what purchasers are willing to pay for corporate stock. There are two primary types of corporate stock: common corporate stock and preferred corporate stock. Each type of corporate stock offers a shareholder certain rights and limitations. A corporate stock certificate is the written instrument that is usually issued to a shareholder. An owner of corporate stock may be entitled to voting rights and the participation in the management of the corporation. Only corporations issue corporate stock. Other business forms such as a sole proprietorship or limited liability entity do not issue corporate stock. Corporate stock differs from other securities, such as notes and bonds, as these do not offer or represent ownership interest.