When and why do corporations issue common and preferred stock? Weegy:
Preferred Stock is stock which is ?preferred? over common stock in any number of different ways. [ For example:
preferred stock may be entitled to dividends before common stock;
preferred stock may have special voting rights (including protective provisions, such as the right to block a subsequent financing or sale transaction);
preferred stock may have the right to be paid first a certain fixed or formulaic amount of money before the common stock on a liquidation or merger of the company into another company (a liquidation preference);
preferred stock may be redeemable at the option of the holder after a certain period of time; or
preferred stock may have a purchase price protection mechanism built into it?such that if the company issues additional stock in the future at a price per share lower than the price per share of the preferred stock, the preferred stock?s purchase price will in effect be reduced on the subsequent stock sale.
Preferred stock may have any one or more of these characteristics. In addition, preferred stock holders may desire contractual rights in addition to the rights specified above?such as:
a voting agreement with the other stockholders, ensuring the preferred stockholders representation on the company?s board of directors;
the right to attend board of director meetings as an observer;
the right to receive financial statements or other information on a regular basis;
the right to meet with management and inspect the company?s properties;
preemptive rights on future stock financings;
rights of first refusal on sales of founder stock;
co-sale rights on founder stock;
drag along rights; and
Companies issue prefer stock for any number of reasons, but most typically, because their investors demand it. ..............www.startuplawblog.com/2009/04/11/why-do-companies-issue-preferred-stock/
] Auto answered|Score 1|sujaysen|Points 2580|User:
For what reasons do corporations acquire treasury stock and how does treasury stock affect stockholders’ equityWeegy:
A treasury stock or reacquired stock is stock which is bought back by the issuing company, [ reducing the amount of outstanding stock on the open market ("open market" including insiders' holdings).
Stock repurchases are often used as a tax-efficient method to put cash into shareholders' hands, rather than paying dividends. Sometimes, companies do this when they feel that their stock is undervalued on the open market. Other times, companies do this to provide a "bonus" to incentive compensation plans for employees. Rather than receive cash, recipients receive an asset that might appreciate in value faster than cash saved in a bank account. Another motive for stock repurchase is to protect the company against a takeover threat.
When the owners are shareholders, the interest can be called shareholders' equity; the accounting remains the same, and it is ownership equity spread out among shareholders. If all shareholders are in one and the same class, they share equally in ownership equity from all perspectives. However, shareholders may allow different priority ranking among themselves by the use of share classes and options. This complicates both analysis for stock valuation and accounting.
The individual investor is interested not only in the total changes to equity, but also in the increase / decrease in the value of his own personal share of the equity. This reconciliation of equity should be done both in total and on a per share basis. ] Auto answered|Score 1|uxiali|Points 586|
All Categories|No Subcategories|Auto answered|9/4/2012 11:32:35 PM