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Preferred stock

Capital stock which provides a specified Dividend to be paid before any dividends are paid to Common stock holders. The dividend may be omitted in some circumstances, such as when the company has insufficient income to pay the dividend. In a liquidation, the claims of preferred stockholders take precedence over the claims of common stock holders. Like common stock, preferred stock represent an ownership interest in a corporation, but preferred stockholders do not enjoy the voting rights of common stockholders. In the event of bankruptcy or liquidation, the preferred stockholders' interest in the company's assets is senior to that of the common shareholders.

Steven Huddart
Smeal College of Business, Penn State University, University Park, PA 16802-3603 USA
(814) 863-0048
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was last updated on Tue, Aug 21, 2018.
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