Financial Accounting I

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Stockholder

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Financial Accounting I

Definition

A stockholder, also known as a shareholder, is an individual or entity that owns shares in a corporation. Stockholders have a claim on part of the company's assets and earnings based on the number of shares they own.

5 Must Know Facts For Your Next Test

  1. Stockholders have the right to vote on important company matters such as electing board members.
  2. Dividends, which are distributions of a portion of a company’s earnings, may be paid to stockholders.
  3. Stockholders can profit from capital gains when they sell their shares for more than they paid.
  4. Ownership of stocks can be transferred through buying and selling in financial markets.
  5. Minority stockholders hold less than 50% of a company's shares and usually do not have control over corporate decisions.

Review Questions

  • What rights do stockholders typically have within a corporation?
  • How can stockholders benefit financially from owning shares?
  • What distinguishes minority stockholders from majority stockholders?
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