Common Stock


Common stocks are equity securities issued as ownership shares in a publicly held corporation. As a group, common stock shareholders can exercise control due to having voting rights, which allows them to elect a board of directors and vote on corporate policy and, based on their proportionate ownership, they may receive dividends as well as enjoying any capital appreciation.

If the company goes bankrupt, the common stockholders are junior to all other classes of securities so will not receive their money until the bondholders, preferred shareholders and other debt holders have been paid in full from the leftover assets. This makes common stock riskier than debt or preferred shares. The upside to common shares is that they usually outperform bonds and preferred shares in the long run. Also, in the U.K. common stock is sometimes called "ordinary shares".