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Threat of takeover.Managerial compensation: Managerial compensation is constructed not only to retain competent managers, but to align managers' interests with those of stockholders as much as possible.Direct intervention by stock holders: Today, the majority of a company's stock is owned by large institutional investors, such as mutual funds and pensions. These large institutional stockholders have the ability to exert influence on managers and as a result the firms operations.Treat of Firing: If stockholders are unhappy with current management, they can encourage the existing board of directors to change the existing management, or stockholders may even re-elect a new board of directors that will accomplish the task.Threat of takeover: If a stock price deteriorates because of management's inability to run the company effectively, competitors or stockholders may take a controlling interest in the company and bring in their own managers.
Corporate management decisions are influenced by the desire to keep stockholders happy.
The major characteristics of a corporation are separate legal existence, limited liability of stockholders, transferable ownership rights, ability to acquire capital, continuous life, corporation management, government regulations, and additional taxes.
The board of directors of a corporation holds the responsibility for the protection and management of the investor's assets. A corporation's board of directors are voted in by the shareholders to serve as representatives on their behalf. In order to serve as an effective member, they are required to display objectivity, and always provide a strong defense of shareholders' rights.
Four primary mechanisms are used to motivate managers to act in stockholders' best interests:Managerial compensationDirect intervention by stockholdersThreat of firingThreat of takeovers1.Managerial CompensationManagerial compensation should be constructed not only to retain competent managers, but to align managers' interests with those of stockholders as much as possible.This is typically done with an annual salary plus performance bonuses and company shares.Company shares are typically distributed to managers either as: Performance shares, where managers will receive a certain number shares based on the company's performance.Executive stock options, which allow the manager to purchase shares at a future date and price. With the use of stock options, managers are aligned closer to the interest of the stockholders as they themselves will be stockholders.2.Direct Intervention by StockholdersToday, the majority of a company's stock is owned by large institutional investors, such as mutual funds and pensions. As such, these large institutional stockholders have the ability to exert influence on mangers and, as a result, the firm's operations.3.Threat of FiringIf stockholders are unhappy with current management, they can encourage the existing board of directors to change the existing management, or stockholders may even re-elect a new board of directors that will accomplish the task.4.Threat of TakeoversIf a stock price deteriorates because of management's inability to run the company effectively, competitors or stockholders may take a controlling interest in the company and bring in their own managers.
YES
However, preferred stockholders are almost always given prior rights over common stockholders in the matter of dividends.
Preferred stockholders take more risk than common stockholders.
Preferred stockholders have a greater claim on the assets and profits of a company compared to common stockholders. If a company is liquidated, preferred stockholders have to be paid first before the common stockholders.
Sell all of their stocks in corporations in which the interests of management do not coincide with those of the stockholders.
A colony in which stockholders were granted rights and privileges by the English.
Vote at Stockholders' meetings Sell or otherwise dispose of their stock Purchase their proportional share of any common stock later issued by the corporation Receive the same dividend, if any, on each common share of the corporation Share in any assets remaining after creditors and preferred stockholders are paid when, and if, the corporation is liquidated. Each common share receives the same amount Stockholders also have the right to receive timely financial reports.
No, only stockholders have voting rights. Bondholders do not.
Stockholders or Management are the owners of a corporation.
(Net Income - Preferred Stock Dividends) / Average common stockholders' equity
preferred stakeholder
Common stockholders participate more in the governance of a corporation than do preferred stockholders. This is accomplished by giving common stockholders the right to vote for members of the board of directors as well as on major decisions