Common stock is a form of corporate equity ownership, which is a type of security . The terms "voting share" or "ordinary share" are also used in other parts of the world. "Common stock" is used primarily in the United States. It is called "common" to distinguish it from preferred stock. If both types of stock exist, common stock holders cannot be paid dividends until all preferred stock dividends (including payments in arrears) are paid in full. Should bankruptcy occur, common stock shareholders receive any remaining funds after the bondholders, creditors (including employees), and preferred stockholders. Such shareholders usually receive nothing in the case of company liquidation.
New York Stock Exchange
Stocks can be bought and sold on exchanges, like the New York Stock Exchange shown above.
While Common stockholders are generally last in line among other creditors to receive assets should the business in question go bankrupt, common shares do tend to perform better than preferred shares over time. Also, Common stock usually carries the right to vote on certain matters. These matters include but are not limited to deciding for who gets to sit on the board of directors of the company. However, a company can have both a "voting" and "non-voting" class of common stock. Common shareholders do not get guaranteed dividends, so their returns can be uncertain. It must be remembered that Preferred stock generally does not carry voting rights.
Holders of common stock are able to influence the corporation through votes on establishing corporate objectives and policy, stock splits, and electing the company's board of directors. Some holders of common stock also receive preemptive rights, which enable them to retain their proportional ownership in a company should it issue another stock offering.