Stockholders

Definition

Stockholders, also known as shareholders, are individuals or entities that own shares in a corporation. They have an equity stake in the company and may receive dividends and voting rights depending on the class of stock they hold.

5 Must Know Facts For Your Next Test

1. Stockholders can be common or preferred, with common stockholders having voting rights and preferred stockholders often receiving fixed dividends.
2. The primary role of stockholders is to provide equity financing to corporations by purchasing shares during issuances.
3. Stockholders' equity is listed on the company's balance sheet under shareholders' equity.
4. Dividends paid to stockholders are distributions of a corporation's earnings and are not guaranteed.
5. Stockholders can influence corporate governance through their voting rights, typically exercised during annual general meetings.

Review Questions

Related terms

Common Stock:

Shares that usually carry voting rights and entitle holders to dividends.

Preferred Stock:

Shares that typically do not have voting rights but offer fixed dividends.

Dividends:

Distributions of a portion of a company's earnings paid to its shareholders.