What Is Stockholder Equity?

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Stockholder equity is ownership by the people who own shares in a company. Stockholder equity allows shareholders to have a voice in the direction of the company. Learn how each piece of stock has a correlating vote with information from an investment manager in this free video on stocks.

Part of the Video Series: Stocks & Mutual Fund Investments
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Video Transcript

What is stockholder equity? Stockholder equity is ownership by people who own shares in a company. When you buy a stock, purchase a share of stock from a company, you own a fractional amount of that company, and that is your equity. Equity is ownership. So, you know, when you buy more shares, you own more of the company, and you're equity increases. Okay, and in that shareholder equity, you're given votes. Every stock, every single piece of stock, has a vote that correlates with it, so, when you're equity increases, the power of your votes increase. So you actually have a way of directing the company and choosing board of directors, choosing, you know, a president or a different office that's being assigned, or...one of the responsibilities from the top. So, owning more and more equity gets you to a place where, ultimately, you would be a controlling member of the company. You would actually have a say in the way things are done.


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