Editing Openai/68df4a3a-428c-8013-a459-5cff8e17edde (section)

=== Assistant: Got it — let’s make the explanation more academic and formal: ===
Got it — let’s make the explanation more academic and formal:

Common Stock represents an equity security that signifies ownership in a corporation. Holders of common stock are considered residual claimants, meaning they have a proportional claim on the company’s assets and earnings after all obligations to creditors and preferred shareholders have been satisfied.

Key characteristics of common stock include:
# Ownership Rights: Common stockholders possess an ownership stake in the issuing corporation, entitling them to share in the firm’s growth and profitability.
# Voting Rights: Most common stock provides shareholders with voting power, typically exercised in the election of the board of directors and approval of major corporate policies. Voting is generally allocated on a “one share, one vote” basis.
# Dividends: Dividends on common stock are not guaranteed and are distributed at the discretion of the board of directors. These dividends represent a portion of the company’s earnings allocated to shareholders.
# Residual Claim: In the event of liquidation, common stockholders are paid after all liabilities and obligations to debt holders and preferred shareholders have been met. As such, common stock carries higher risk but also offers higher potential returns relative to debt and preferred equity.
# Market Value: The market price of common stock reflects investors’ expectations about the company’s future earnings, growth potential, and overall risk.

👉 In academic terms, you could summarize:
Common stock is an equity instrument that provides shareholders with ownership, voting rights, and residual claims, while exposing them to higher risk and potential return compared to other forms of corporate financing.

Would you like me to refine this into a textbook-style definition (very concise) or a longer explanatory paragraph that could fit into an essay?