Definition
A type of equity ownership in a corporation that represents a residual claim on assets and earnings after all debts and preferred stock obligations are satisfied. Common shareholders typically have voting rights.
Why It Matters
Common stock allows companies to raise capital without incurring debt and gives investors the potential for capital gains and dividends, though with higher risk compared to bonds or preferred stock.
Example
An investor purchases shares of a publicly traded company and becomes a common shareholder with voting rights at annual meetings.