FACTOID # 11: Oklahoma has the highest rate of women in State or Federal correctional facilities.
 
 Home   Encyclopedia   Statistics   States A-Z   Flags   Maps   FAQ   About 
   
 
WHAT'S NEW
RELATED ARTICLES
People who viewed "Shares" also viewed:
 

SEARCH ALL

FACTS & STATISTICS    Advanced view

Search encyclopedia, statistics and forums:

 

 

(* = Graphable)

 

 


Encyclopedia > Shares
See stock (disambiguation) for other meanings of the term stock

A stock, also referred to as a share, is commonly a share of ownership in a corporation.

Contents

History

The first company that issued shares is considered to be the Stora Kopparberg, in the 13th century.


Ownership

The owners and financial backers of a company may want additional capital to invest in new projects within the company. If they were to sell the company it would represent a loss of control over the company.


Alternatively, by selling shares, they can sell part or all of the company to many part-owners. The purchase of one share entitles the owner of that share to literally a share in the ownership of the company, including the right to a fraction of the assets of the company, a fraction of the decision-making power, and potentially a fraction of the profits, which the company may issue as dividends. However, the original owners of the company often still have control of the company, and can use the money paid for the shares to grow the company.


In the common case, where there are thousands of shareholders, it is impractical to have all of them making the daily decisions required in the running of a company. Thus, the shareholders will use their shares as votes in the election of members of the board of directors of the company. However, the choices are usually nominated by insiders or the board of the directors themselves, which over time has led to most of the top executives being on each other's boards. Each share constitutes one vote (except in a co-operative society where every member gets one vote regardless of the number of shares they hold). Thus, if one shareholder owns more than half the shares, they can out-vote everyone else, and thus have control of the company.


Shareholder rights

Although owning 51% of shares does mean that you own 51% of the company and that you have 51% of the votes, the company is considered a legal person, thus it owns all its assets, (buildings, equipment, materials etc) itself. A shareholder has no right to these without the company's permission, even if that shareholder owns almost all the shares. This is important in areas such as insurance, which must be in the name of the company not the main shareholder.


In most countries, including the United States, boards of directors and company managers have a fiduciary responsibility to run the company in the interests of its stockholders. Nonetheless, as Martin Whitman writes, "...it can safely be stated that there does not exist any publicly traded company where management works exclusively in the best interests of OPMI [Outside Passive Minority Investor] stockholders." Instead, there are both "communities of interest" and "conflicts of interest" between stockholders and management. "It would be naive to think that any management would forego management compensation, and management entrenchment, just because some of these management privileges might be perceived as giving rise to a conflict of interest with OPMIs." [Whitman, 2004, 5]


Means of financing

Financing a company through the sale of stock in a company is known as equity financing. Alternatively debt financing can be done to avoid giving up shares of ownership of the company.


Trading

Shares of stock are usually traded on a stock exchange, where people and organisations may buy and sell shares in a wide range of companies. A given company will usually only trade its shares in one market, and it is said to be quoted, or listed, on that stock exchange. However, some large, multinational corporations are listed on more than one exchange. They are referred to as inter-listed shares.


Types

There are several types of shares, including common stock, preferred stock, treasury stock, and dual class shares. Preferred stock, sometimes called preference shares, have priority over common stock in the distribution of dividends and assets, and sometime have enhanced voting rights such as the ability to veto mergers or aquistions. A dual class equity structure has several classes of shares (for example Class A, Class B, and Class C) each with its own advantages and disadvantages. Treasury stock are shares that have been bought back from the public.


Derivatives

A stock option is the right (or obligation) to buy or sell stock in the future at a fixed price. Stock options are often part of the package of executive compensation offered to key executives. Some companies extend stock options to all (or nearly all) of their employees. This was especially true during the dot-com boom of the mid- to late- 1990s, in which the major compensation of many employees was in the increase in value of the stock options they held, rather than their wages or salary. This is still a major method of compensation for CEO's.


The theory behind granting stock options to executives and employees of a corporation is that, since their financial fortunes are tied to the stock price of the company, they will be motivated to increase the value of the stock over time.


See also

References

  • Whitman, Martin, [Third Avenue Value Fund (http://www.thirdavenuefunds.com/4Q04.pdf), in Third Avenue Funds Letters to Our Shareholders, Q4, 2004.

External links

  • oldest share (http://www.oldest-share.com/) - the oldest share in the world (Voc 1606)

  Results from FactBites:
 
Share (697 words)
Share is an audience measurement term that identifies the percentage of television households with sets in use which are viewing a particular program during a given time period.
Share is a comparative tool; it allows station and network executives to determine how well their programs are doing when compared with competing programs on other broadcast or cable channels.
Share measures the percentage of TV viewers who are actually watching a particular program, while the rating for a program calculates the percentage of all television households--both those using TV and those not using TV.
Share - Wikipedia, the free encyclopedia (150 words)
Share (finance), a stock or other security such as a mutual fund.
Share International, a new religious movement founded by the British painter Benjamin Creme.
Network share, a file storage area that is available over a computer network.
  More results at FactBites »

 
 

COMMENTARY     


Share your thoughts, questions and commentary here
Your name
Your comments

Want to know more?
Search encyclopedia, statistics and forums:

 


Press Releases |  Feeds | Contact
The Wikipedia article included on this page is licensed under the GFDL.
Images may be subject to relevant owners' copyright.
All other elements are (c) copyright NationMaster.com 2003-5. All Rights Reserved.
Usage implies agreement with terms, 1022, m