stockholders

(noun)

A shareholder or stockholder is an individual or institution (including a corporation) that legally owns a share of stock in a public or private corporation.

Related Terms

Examples of stockholders in the following topics:

  • Accounting for Preferred Stock

    • diluting the common stockholders' control of the corporation, since preferred stockholders usually have no voting rights.
    • Stock preferred as to dividends means that the preferred stockholders receive a specified dividend per share before common stockholders receive any dividends.
    • Usually, stockholders receive dividends on preferred stock quarterly.
    • The company would pay the preferred stockholders dividends of USD 20,000 (USD 10,000 per year times two years) before paying any dividends to the common stockholders.
    • Preferred stockholders receive the par value (or a larger stipulated liquidation value) per share before any assets are distributed to common stockholders.

  • Corporations

    • A corporation has limited liability.Stockholders own the corporation, and they are not liable for a corporation's debt.If a corporation fails, subsequently, the stockholders only lose their investment, the amount of common stock that they had purchased.
    • Stockholders can easily transfer corporate ownership.Stocks are certificates that represent ownership in a corporation, and stockholders can freely buy or sell stock to other investors through the stock market.
    • Stockholders do not have a mutual agency relationship, where the stockholders cannot bind a corporation to contracts.Stockholders have no say in the daily operation of the corporation even though they own the corporation.
    • Cumulative Preferred Stock – a corporation must pay past-due dividends to cumulative preferred stockholders before it pays dividends to common stockholders.Stockholders only receive dividends, when the board of directors declares them.
    • Convertible Stock – a stockholder can convert preferred stock into common stock on a specific date in the future.

  • Dividend Irrelevance Theory

    • Under perfect market conditions, stockholders would ultimately be indifferent between returns from dividends or returns from capital gains.
    • However, the total return from both dividends and capital gains to stockholders should be the same.
    • If dividends are too small, a stockholder can simply choose to sell some portion of his stock.
    • Therefore, if there are no tax advantages or disadvantages involved with these two options, stockholders would ultimately be indifferent between returns from dividends or returns from capital gains.

  • The Statement of Equity

    • The statement of equity (and similarly the equity statement, statement of owner's equity for a single proprietorship, statement of partner's equity for a partnership, and statement of retained earnings and stockholders' equity for a corporation) are basic financial statements.
    • Retained earnings are part of the balance sheet under "stockholders equity (shareholders' equity)" and is mostly affected by net income earned during a period of time by the company minus any dividends paid to the company's owners and stockholders.

  • Control and Preemption

    • A shareholder or stockholder is an individual or institution (including a corporation) that legally owns a share of stock in a public or private corporation.
    • Stockholders are granted special privileges depending on the class of stock.

  • Answers to Chapter 7 Questions

    • Furthermore, the bondholders do not vote at a corporation's stockholders meeting and thus, do not compete with the stockholders over control of a corporation.
    • Consequently, stockholders could earn a higher dividend if a corporation uses bonds to expand operations.

  • Accounting Considerations

    • Retained earnings are part of the balance sheet (another basic financial statement) under "stockholders equity (shareholders' equity). " It is mostly affected by net income earned during a period of time by the company less any dividends paid to the company's owners/stockholders.
    • On the date of payment, when dividend checks are mailed out to stockholders, the dividends payable account is debited and the firm's cash account is credited.
    • If a firm authorizes a 15% stock dividend on Dec 1st, distributable on Feb 29, and to stockholders of record on Feb 1, the stock currently has a market value of $15 and a par value of $4.

  • Reporting Stockholders' Equity

  • Treasury Stock

    • When a corporation has additional authorized shares of stock that are to be issued after the date of original issue, in most states the preemptive right requires offering these additional shares first to existing stockholders on a pro rata basis.
    • However, firms may reissue treasury stock without violating the preemptive right provisions of state laws; that is, treasury stock does not have to be offered to current stockholders on a pro rata basis.
    • The treasury stock amount is subtracted from the other stockholders' equity amount, therefore it is considered a contra account.

  • Ownership Nature of Stock

    • A shareholder or stockholder is an individual or institution (including a corporation) that legally owns a share of stock in a public or private corporation.
    • Stockholders or shareholders are considered by some to be a subset of stakeholders, which may include anyone who has a direct or indirect interest in the business entity.