common

Common stock is a form of corporate equity ownership, a type of security. The terms “voting share” or “ordinary share” are also used frequently in other parts of the world; “common stock” being primarily used in the United States. It is called “common” to distinguish it from preferred stock. If both types of stock exist, common stock holders cannot be paid dividends until all preferred stock dividends are paid in full. In the event of bankruptcy, common stock investors receive any remaining funds after bondholders, creditors (including employees), and preferred stock holders are paid. As such, common stock investors often receive nothing after a bankruptcy. On the other hand, common shares on average perform better than preferred shares or bonds over time.