The only part of operation that shareholders will have a say in is corporation management. If an investor is unhappy with the way that a company is being managed, he/she will be able to express this disapproval at annual meetings through voting.
Each investor is permitted to cast one vote for each share of stock that he/she holds in order to elect the board of directors. Therefore, individuals with stock investments in a certain company will hold a limited say in how the company is run.
Investors that purchase many shares of stock naturally have a louder voice, so to speak, regarding the way that a corporation is operated. Individuals who possess extensive amounts of finances often invest hundreds of thousands of dollars in a corporation. Individuals that posses stock investments of this caliber, such as wealthy entrepreneurs, generally call the shots regarding the operation of a company.
Often, the board of directors is cautious enough to adhere to the desires of these wealthy shareholders so that they will continue investing in the company. If these investors do not approve of the way that a corporation is being run, then they usually hold enough shares to negate the desires and the votes of small investors.
Despite this, some consumers invest in stocks simply because they enjoy the idea of obtaining ownership over a portion of a company. Specifically, if an individual wishes to support a specific product, or if he/she appreciates a certain company, then that individual may choose to invest in the company. The company will then be able to utilize the investments of shareholders in order to operate its business.
The corporation will not be required to pay principal or interest on the funds that it obtains from shareholders. Therefore, by investing in a company, an individual is essentially helping this company to operate.
The primary reason that individuals purchase shares of stock is to gain a profit on a sum of money. Over time, if a business is successful, the value of a share will increase. As a result, when an investor sells his/her shares, he/she will obtain more money then he/she originally invested in the company.
