What role do stockholders have in a corporation?

Stockholders, or shareholders, are individuals or entities that own shares of a corporation, which represents a portion of ownership in the company. The primary role of stockholders is to invest capital into the corporation in exchange for ownership stakes, typically manifested as stocks or shares.

By owning shares, stockholders are entitled to share in the profits of the corporation, often in the form of dividends or through an increase in the share price. When a corporation earns profits, it may choose to distribute a part of those profits to its stockholders as dividends, thereby rewarding them for their investment. Additionally, if the company grows and becomes more valuable, the value of the stock itself appreciates, allowing stockholders to gain financially through the selling of their shares at a higher price.

This ownership provides them with a level of influence over corporate decisions, particularly through voting rights that allow them to elect the board of directors and vote on key corporate policies at annual meetings. However, it is important to note that stockholders do not manage daily operations or take responsibility for the corporation's debts beyond their investment in stock; their financial risk is limited to the amount they invested in shares. This structure of profit-sharing aligns the interests of stockholders with the overall success of the corporation.