Introduction

Abstract

Stock, which is issued in the form of shares, is a certification of the ownership of a company. It is a type of security, “a legal representation of the right to receive prospective future benefits under stated conditions” [117]. A share of stock represents a unit of ownership. There are two classes of stock: the common stock and the preferred stock. Majority of the stock issued is usually referred to as the common stock. It is a residual claim but with voting rights. The holders of the preferred stock have a fixed or predetermined dividend and a superior priority over the common stockholders on the payment of dividend in the event of liquidation, but they usually do not have voting rights.