statutory voting
each share held is assigned one vote in the election of each member of the board of directors
cumulative voting
shareholders can allocate their votes to one or more candidates as they choose
Preference shares (or preferred stock)
Like debt, preferred shares typically make fixed periodic payments to investors and do not usually have voting rights.
Cumulative preference shares
are usually promised fixed dividends, and any dividends that are not paid must be made up before common shareholders can receive dividends.
non-cumulative preference shares
Preference shares for which dividends that are not paid in the current or subsequent periods are forfeited permanently (instead of being accrued and paid at a later date).
Preferred shares
have a stated par value and pay a percentage dividend based on the par value of the shares.
participating preference shares
receive an extra dividend if firm profits exceed a predetermined level and may receive a value greater than par of preferred stock if firm is liquidated.
Non-participating preference shares
have a claim equal to par value in the event of liquidation and do not share in firm profits
Convertible preference shares
can be exchanged for common stock at a conversion ratio determined when the shares are originally issued.
Compared to public equity, private equity has the following characteristics:
- Less liquidity because no public market for the shares exists.
- Share price is negotiated between the firm and its investors, not determined in a market.
- More limited firm financial disclosure because there is no government or exchange requirement to
The three main types of private equity investments
are venture capital, leveraged buyouts, and private investments in public equity
Venture capital
refers to the capital provided to firms early in their life cycles to fund their development and growth
leveraged buyout
investors buy all of a firm's equity using debt financing (leverage). If the buyers are the firm's current management, the LBO is referred to as a management buyout (MBO)