What are common stockholders entitled to?

Common stockholders are entitled to a share of the profits generated by the company and possess voting rights in company matters. This entitlement to profits typically manifests through dividends, which are not guaranteed and depend on the company's financial performance and decisions made by the board of directors. Moreover, common stockholders have the right to vote on significant corporate issues, such as electing the board of directors or approving mergers and acquisitions, thereby influencing the company's strategy and governance.

The nature of common stock allows shareholders to participate in the company's growth and success. While they may receive dividends, these are issued at the discretion of the company, hence they are not guaranteed. In contrast, fixed interest payments are characteristic of bonds and other debt instruments, which means that common stockholders do not receive guaranteed returns. Priority during liquidation is typically given to creditors and preferred stockholders before any assets are distributed to common stockholders, further highlighting the relative risk and reward associated with owning common stock.