Common stock

Common stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently in other parts of the world; "common stock" being primarily used in the United States. They are known as Equity shares or Ordinary shares in the UK and other Commonwealth realms. This type of share gives the stockholder the right to share in the profits of the company, and to vote on matters of corporate policy and the composition of the members of the board of directors.

It is called "common" to distinguish it from preferred stock. If both types of stock exist, common/equity stockholders usually cannot be paid dividends until all preferred/preference stock dividends are paid in full; it is possible to have common stock that has dividends that are paid alongside the preferred stock.

In the event of bankruptcy, common stock investors receive any remaining funds after bondholders, creditors (including employees), and preferred stockholders are paid. As such, common stock investors often receive nothing after a liquidation bankruptcy Chapter 7.

Common stockholders can also earn money through capital appreciation. Common shares may perform better than preferred shares or bonds over time, in part to accommodate the increased risk.[1]

Shareholder rights

Shareholder rights are more conceptual than technical or factual. Their most common source is in the statutory and case law of the jurisdiction in which the company was formed. Information about what people think of as shareholder rights can also be found in the corporate charter and governance documents, but companies do not actually have documentation outlining specific "Shareholder Rights". Some shareholders elect to enter into shareholder agreements that create new rights among the shareholders, and it is common for the company to be a party to that agreement.

Some common stock shares have voting rights on certain matters, such as electing the board of directors. However, in the United States, a company can have both a "voting" and "non-voting" series of common stock, as with preferred stock, but not in countries which have laws against multiple voting and non-voting shares

Hypothetically speaking, holders of voting common stock can influence the corporation through votes on establishing corporate objectives and policy, stock splits, and electing the company's board of directors. In practice, it's questionable whether or not such actions can be organized or ruled in their favor. Some shareholders, including holders of common stock, also receive preemptive rights, which enable them to retain their proportional ownership in a company if it issues additional stock or other securities. There is no fixed dividend paid out to common/equity stockholders and so their returns are uncertain, contingent on earnings, company reinvestment, and efficiency of the market to value and sell stock.[2]

Classification

Common/Equity stock is classified to differentiate it from preferred stock. Each is considered a "class" of stock, with different series of each issued from time to time such as Series B Preferred Stock. Nevertheless, using "Class B Common Stock" is a common label for a super-voting series of common stock.

See also

References

  1. ^ "Common Stock". Investopedia.com. ValueClick. Retrieved 2013-05-12.
  2. ^ "Characteristics of common stock".

External links

Account (bookkeeping)

In bookkeeping, an account refers to assets, liabilities, income, expenses, and equity, as represented by individual ledger pages, to which changes in value are chronologically recorded with debit and credit entries. These entries, referred to as postings, become part of a book of final entry or ledger. Examples of common financial accounts are sales, accounts receivable, mortgages, loans, PP&E, common stock, sales, services, wages and payroll.

A chart of accounts provides a listing of all financial accounts used by particular business, organization, or government agency.

The system of recording, verifying, and reporting such information is called accounting. Practitioners of accounting are called accountants.

Allmennaksjeselskap

Allmennaksjeselskap (literally "public stock company"), or ASA, is the Norwegian term for a public limited company. "ASA" or "asa" is added to the company name of all Norwegian companies registered as Allmennaksjeselskap.

The ASA differentiates from the Aksjeselskap, or AS, in that it has rules regulating its ownership. There cannot be any rules limiting the company's ownership to certain interests, and an ASA must offer a public tender to purchase stock, either new stock or from existing owners if the company is converted from an AS. Norwegian companies, both those listed on a stock exchange and banks, must be ASAs (banks, however, are exempt from certain regulation including ownership regulation). An ASA is required to have a capital of NOK 1 million; a board with at least 40% of its members from each gender as well as an auditor.

Capital surplus

Capital surplus, also called share premium, is an account which may appear on a corporation's balance sheet, as a component of shareholders' equity, which represents the amount the corporation raises on the issue of shares in excess of their par value (nominal value) of the shares (common stock).

This is called Additional paid in capital in US GAAP terminology but, additional paid in capital is not limited to share premium. It is a very broad concept and includes tax related and conversion related adjustments.

Taken together, common stock (and sometimes preferred stock) issued and paid (plus capital surplus) represent the total amount actually paid by investors for shares when issued (assuming no subsequent adjustments or changes).

Shares for which there is no par value will generally not have any form of capital surplus on the balance sheet; all funds from issuing shares will be credited to common stock issued.

Some other scenarios for triggering a capital surplus include when the Government donates a piece of land to the company.

The capital surplus/share premium account (SPA) is generally not distributable, but may be used to:

write off the expenses/commission relating to the issue of those shares, or

make a bonus share issue of fully paid-up shares.It may also be used to account for any gains the firm may derive from selling treasury stock, although this is less commonly seen.

Capital surplus is also a term used by economists to denote capital inflows in excess of capital outflows on a country's balance of payments.

CoTherix

CoTherix, Inc. was a biopharmaceutical company located in South San Francisco, California. CoTherix focused on licensing, developing, and commercializing therapeutic products for the treatment of cardiopulmonary and other chronic diseases. The company, formerly known as Exhale Therapeutics, Inc., was founded in February 2000 by Gerard Turino, MD, a past president of the American Thoracic Society, and Jerome Cantor, MD, a pulmonary pathologist.

CoTherix's commercial product was "Ventavis (Iloprost)", an inhaled therapy for pulmonary artery hypertension (PAH). It was approved by the United States Food and Drug Administration in December 2004, two months after the company's initial public offering of 5 millions shares of common stock.

CoTherix inlicensed Fasudil from Asahi Kasei and its commercialization rights in the U.S. and Europe.

On November 20, 2006, CoTherix agreed to be purchased for $420 million in cash by Actelion of Basel, Switzerland. On January 9, 2007, the deal closed with Actelion paying $13.50 for each share of CoTherix stock.

Consolidation (business)

In business, consolidation or amalgamation is the merger and acquisition of many smaller companies into a few much larger ones. In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group company as consolidated financial statements. The taxation term of consolidation refers to the treatment of a group of companies and other entities as one entity for tax purposes. Under the Halsbury's Laws of England, 'amalgamation' is defined as "a blending together of two or more undertakings into one undertaking, the shareholders of each blending company, becoming, substantially, the shareholders of the blended undertakings. There may be amalgamations, either by transfer of two or more undertakings to a new company, or to the transfer of one or more companies to an existing company".

Convertible arbitrage

Convertible arbitrage is a market-neutral investment strategy often employed by hedge funds. It involves the simultaneous purchase of convertible securities and the short sale of the same issuer's common stock.

The premise of the strategy is that the convertible is sometimes priced inefficiently relative to the underlying stock, for reasons that range from illiquidity to market psychology. In particular, the equity option embedded in the convertible bond may be a source of cheap volatility, which convertible arbitrageurs can then exploit.

The number of shares sold short usually reflects a delta-neutral or market-neutral ratio. As a result, under normal market conditions, the arbitrageur expects the combined position to be insensitive to small fluctuations in the price of the underlying stock. However, maintaining a market-neutral position may require rebalancing transactions, a process called dynamic delta hedging. This rebalancing adds to the return of convertible arbitrage strategies.

Discovery, Inc.

Discovery, Inc. (formerly Discovery Communications) is an American mass media company based in Silver Spring, Maryland and established in 1985.

The company primarily operates factual television networks, such as its namesake Discovery Channel, Animal Planet, Investigation Discovery, Science Channel, TLC, and other spin-off brands. In March 2018, the company completed its acquisition of Scripps Networks Interactive, which added networks such as Food Network, HGTV, and Travel Channel to its portfolio. The combined company operates five of the ten most-watched U.S. cable channels among women.Discovery also owns or has interests in local versions of its channel brands in international markets, in addition to its other major regional operations such as Eurosport (a pan-European group of sports channels), Discovery Communications Nordic (which operates general-interest channels in Norway, Sweden, Denmark and Finland), TVN Group in Poland,

Lionsgate, an American-Canadian movie studio, UKTV, a British channel group co-owned with BBC Studios, and a portfolio of various free-to-air channels in Germany and Italy such as DMAX and Real Time.

Earnings per share

Earnings per share (EPS) is the monetary value of earnings per outstanding share of common stock for a company.

In the United States, the Financial Accounting Standards Board (FASB) requires EPS information for the four major categories of the income statement: continuing operations, discontinued operations, extraordinary items, and net income.

Fixed income

Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year, and to repay the principal amount on maturity. Fixed-income securities can be contrasted with equity securities – often referred to as stocks and shares – that create no obligation to pay dividends or any other form of income.

In order for a company to grow its business, it often must raise money – for example, to finance an acquisition; to buy equipment or land; or to invest in new product development. The terms on which investors will finance the company will depend on the risk profile of the company. The company can give up equity by issuing stock, or can promise to pay regular interest and repay the principal on the loan (bonds or bank loans). Fixed-income securities also trade differently than equities. Whereas equities, such as common stock, trade on exchanges or other established trading venues, many fixed-income securities trade over-the-counter on a principal basis.The term "fixed" in "fixed income" refers to both the schedule of obligatory payments and the amount. "Fixed income securities" can be distinguished from inflation-indexed bonds, variable-interest rate notes, and the like. If an issuer misses a payment on a fixed income security, the issuer is in default, and depending on the relevant law and the structure of the security, the payees may be able to force the issuer into bankruptcy. In contrast, if a company misses a quarterly dividend to stock (non-fixed-income) shareholders, there is no violation of any payment covenant, and no default.

The term fixed income is also applied to a person's income that does not vary materially over time. This can include income derived from fixed-income investments such as bonds and preferred stocks or pensions that guarantee a fixed income. When pensioners or retirees are dependent on their pension as their dominant source of income, the term "fixed income" can also carry the implication that they have relatively limited discretionary income or have little financial freedom to make large or discretionary expenditures.

Fortune 1000

Fortune 1000 is a reference to a list maintained by the American business magazine Fortune. The list is of the 1,000 largest American companies, ranked by revenues. Eligible companies are any which are incorporated or authorized to do business in the United States, and for which revenues are publicly available (this list has a larger universe than "public companies", as the term is commonly understood, meaning "companies whose common stock trades on a stock market"). The Fortune 500 is the subset of the list that is its 500 largest companies.

The list draws the attention of business readers seeking to learn the influential players in the American economy and prospective sales targets, as these companies tend to have large budgets and staff needs.

Walmart was number 1 on the list for five of the seven years from 2007 to 2014, interrupted only by ExxonMobil in 2009 and 2012.

Graham Holdings Company

Graham Holdings Company (formerly The Washington Post Company) is a diversified American conglomerate, best known for formerly owning the newspaper for which it was once named, The Washington Post, and Newsweek.

Its holdings include the digital marketing company SocialCode, the online magazine Slate, Graham Media Group (formerly Post-Newsweek Stations), a group of seven television stations, higher education company Kaplan, and the now closed Trove (formerly WaPo Labs)—the developers of a news reader app. Graham Holdings Company also owned cable television and internet service provider Cable One until it was spun off in 2015.

Henry Ford family tree

Today the descendants of Henry Ford control the Ford Motor Company, although they have a minority ownership of 2%. Also, a member of the Ford family has controlled the Detroit Lions NFL franchise since 1963. Based on a market cap of $59.83 billion, the Ford family holds $1.2 billion worth of common stock. The following is the family tree of Henry Ford, founder of the Ford Motor Company.

Market neutral

An investment strategy or portfolio is considered market-neutral if it seeks to avoid some form of market risk entirely, typically by hedging. To evaluate market-neutrality requires specifying the risk to avoid. For example, convertible arbitrage attempts to fully hedge fluctuations in the price of the underlying common stock.

A portfolio is truly market-neutral if it exhibits zero correlation with the unwanted source of risk. Market neutrality is an ideal, which is seldom possible in practice. A portfolio that appears market-neutral may exhibit unexpected correlations as market conditions change. The risk of this occurring is called basis risk.

National Amusements

National Amusements, Inc. is an American privately-owned theater company and mass media holding company based in Dedham, Massachusetts and incorporated in Maryland. It was the parent company of the first incarnation of Viacom, and is the parent company of CBS Corporation and second incarnation of Viacom that were split off in 2006.

As of December 2016, National Amusements, directly and through subsidiaries, holds approximately 79.8% of the Class A (voting) common stock of Viacom Inc., constituting 10% of the overall equity of the Company, and holds approximately 79.5% of the Class A (voting) common stock and 2.4% of the Class B (non‐voting) common stock of CBS Corporation, constituting 9.1% of the overall equity of the Company.

The company operates more than 1,500 movie screens across the Northeastern United States, the United Kingdom, Latin America, and Russia under its Showcase Cinemas, Multiplex Cinemas, Cinema de Lux, and KinoStar brands.

Preferred stock

Preferred stock (also called preferred shares, preference shares or simply preferreds) is a form of stock which may have any combination of features not possessed by common stock including properties of both an equity and a debt instrument, and is generally considered a hybrid instrument. Preferred stocks are senior (i.e., higher ranking) to common stock, but subordinate to bonds in terms of claim (or rights to their share of the assets of the company) and may have priority over common stock (ordinary shares) in the payment of dividends and upon liquidation. Terms of the preferred stock are described in the issuing company's articles of association or articles of incorporation.

Like bonds, preferred stocks are rated by the major credit rating companies. The rating for preferred stocks is generally lower than for bonds because preferred dividends do not carry the same guarantees as interest payments from bonds and because preferred-stock holders' claims are junior to those of all creditors.

Robert Wodehouse

Robert Wodehouse (died 1346) was a medieval English administrator.

He was probably born of common stock in Norwell Woodhouse, Nottinghamshire and found employment as a clerk in the office of the privy seal. In a forty-year career he held a succession of offices. He was cofferer and comptroller of the wardrobe (1309–1318), before being promoted a baron of the exchequer (until 1323). After another brief spell as comptroller (and Keeper of the Privy Seal) he was appointed in 1323 keeper of the wardrobe (until 1328).

He was then Treasurer (1329-1330), Chancellor of the Exchequer (1330–1331) and Treasurer again in 1338. In December 1338 he was dismissed by Edward III for unsatisfactory service, bringing his government career to an end. However, during his long career he had been well rewarded with a number of church benefices and in 1328 being appointed Archdeacon of Richmond, Yorkshire.

He died, probably at Stamford, early in 1346 and was buried in the choir of the church of the Augustinian friary in Stamford.

Series A round

A series A round is the name typically given to a company's first significant round of venture capital financing. The name refers to the class of preferred stock sold to investors in exchange for their investment. It is usually the first series of stock after the common stock and common stock options issued to company founders, employees, friends and family and angel investors.

Stock

The stock (also capital stock) of a corporation is all of the shares into which ownership of the corporation is divided. In American English, the shares are commonly known as "stocks." A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. This typically entitles the stockholder to that fraction of the company's earnings, proceeds from liquidation of assets (after discharge of all senior claims such as secured and unsecured debt), or voting power, often dividing these up in proportion to the amount of money each stockholder has invested. Not all stock is necessarily equal, as certain classes of stock may be issued for example without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of shareholders.

Stock can be bought and sold privately or on stock exchanges, and such transactions are typically heavily regulated by governments to prevent fraud, protect investors, and benefit the larger economy. As new shares are issued by a company, the ownership and rights of existing shareholders are diluted in return for cash to sustain or grow the business. Companies can also buy back stock, which often lets investors recoup the initial investment plus capital gains from subsequent rises in stock price. Stock options, issued by many companies as part of employee compensation, do not represent ownership, but represent the right to buy ownership at a future time at a specified price. This would represent a windfall to the employees if the option is exercised when the market price is higher than the promised price, since if they immediately sold the stock they would keep the difference (minus taxes).

Venture round

A venture round is a type of funding round used for venture capital financing, by which startup companies obtain investment, generally from venture capitalists and other institutional investors. The availability of venture funding is among the primary stimuli for the development of new companies and technologies.

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