💼 Stockholders and Equity Ownership 💼
💼 What shareholders actually own are shares issued by the corporation; and the corporation owns the assets held by a firm.
❌ So if you own 33% of the shares of a company, it is incorrect to assert that you own one-third of that company
✅ It is instead correct to state that you own 100% of one-third of the company's shares.
💼 Shareholders cannot do as they please with a corporation or its assets.
💼 A shareholder can't walk out with a chair because the corporation owns that chair, not the shareholder.
This is known as the "separation of ownership and control."
💼 Owning stock gives you the right to vote in shareholder meetings, receive dividends (which are the company's profits) if and when they are distributed, and it gives you the right to sell your shares to somebody else.
💼 If you own a majority of shares, your voting power increases so that you can indirectly control the direction of a company by appointing its board of directors.
💼 This becomes most apparent when one company buys another: the acquiring company doesn't go around buying up the building, the chairs, the employees; it buys up all the shares.
💼 The board of directors is responsible for increasing the value of the corporation, and often does so by hiring professional managers, or officers, such as the Chief Executive Officer, or CEO.
💼 For most ordinary shareholders, not being able to manage the company isn't such a big deal.
💼 The importance of being a shareholder is that you are entitled to a portion of the company's profits, which, as we will see, is the foundation of a stock's value.
💼 The more shares you own, the larger the portion of the profits you get.
💼 Many stocks, however, do not pay out dividends, and instead reinvest profits back into growing the company.
💼 These retained earnings, however, are still reflected in the value of a stock.
Adam Hayes
@FinancialFreedomMagazine
💼 What shareholders actually own are shares issued by the corporation; and the corporation owns the assets held by a firm.
❌ So if you own 33% of the shares of a company, it is incorrect to assert that you own one-third of that company
✅ It is instead correct to state that you own 100% of one-third of the company's shares.
💼 Shareholders cannot do as they please with a corporation or its assets.
💼 A shareholder can't walk out with a chair because the corporation owns that chair, not the shareholder.
This is known as the "separation of ownership and control."
💼 Owning stock gives you the right to vote in shareholder meetings, receive dividends (which are the company's profits) if and when they are distributed, and it gives you the right to sell your shares to somebody else.
💼 If you own a majority of shares, your voting power increases so that you can indirectly control the direction of a company by appointing its board of directors.
💼 This becomes most apparent when one company buys another: the acquiring company doesn't go around buying up the building, the chairs, the employees; it buys up all the shares.
💼 The board of directors is responsible for increasing the value of the corporation, and often does so by hiring professional managers, or officers, such as the Chief Executive Officer, or CEO.
💼 For most ordinary shareholders, not being able to manage the company isn't such a big deal.
💼 The importance of being a shareholder is that you are entitled to a portion of the company's profits, which, as we will see, is the foundation of a stock's value.
💼 The more shares you own, the larger the portion of the profits you get.
💼 Many stocks, however, do not pay out dividends, and instead reinvest profits back into growing the company.
💼 These retained earnings, however, are still reflected in the value of a stock.
Adam Hayes
@FinancialFreedomMagazine