Differentiate Types of Stocks Issued by Corporations

Differentiate types of stocks issued by corporations

Stocks that are issued by companies will allow individuals to be partial owners of a company. "Corporations issue stocks in accordance with their Articles of Incorporation, which specify the types and maximum number of stocks that can be issued"(EHow.com). They use stock issuance, as well as debt, for business financing. The types of financing, and specifically the types of stocks they issue, are determined by specific financing needs and current market conditions. There are several stocks that corporations can issue but they can issue most common stocks directly or indirectly. There is Par and a No-Par value stock that is capital stock to which the charter has assigned a value per share. Another stock would be the Treasury stock is when corporation's own stock that the corporation has issued, fully paid for, and reacquired but not retired. One of the stocks issue is the preferred stocks which are given to owners as dividends and have more priority than the common stock itself. Also, the owners who invested into preferred stocks get their money back before the common stockholders get theirs. The only disadvantage of having a preferred stock is that owners do not get the full benefits of profits because they are only paid a fixed dividend payment.

References

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2010). Financial accounting (7th ed.). Hoboken, NJ: John Wiley & Sons.

Slav Fedorov (2010).Different kind of stocks, Retrieved August 26, 2011 at http://www.ehow.com/list_7150287_different-types-stocks.html