The common stock (also called common shares) of a corporation is the residual equity interest in the corporation. This means that the holders of common stock are not entitled to any fixed amount of money from the corporation; instead, they are entitled to whatever is left over after all claims ranking above the common stock have been paid in full. Thus, the common stock has potentially unlimited potential to appreciate in value, but is riskier because it ranks below all other claims on the corporation.
Common stock should be distinguished from preferred stock, which ranks above the common stock in dividends or on liquidation or both. Virtually all corporations have at least one share of common stock, but a corporation need not have any preferred stock. The common stock is also generally the repository of voting rights in the corporation. Preferred stock may have voting rights, especially when preferred stock dividends have not been paid, but often does not.