Markets · 6 pages · 12 min

How a stock is a slice of a company

A share of stock is a fractional ownership claim on a company, not a claim on one asset.

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From the opening

A share of common stock is a slice of the ownership of a corporation, a residual claim on what remains after the company pays its debts and other senior obligations. The shareholder owns that claim on the firm as a whole, not a particular machine, building, or dollar in a company account. The opening covers common stock is a residual claim, creditors stand ahead of owners, and dividends are declared, not owed.

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Inside

Common stock is a residual claim
Creditors stand ahead of owners
Dividends are declared, not owed
Liability stops at the share
Where the idea stops applying
A distinction worth keeping

Sources

Common stock residual claim
Limited liability of shareholders

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How a stock is a slice of a company

From the opening

Inside

Sources

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