How does a stockholder in a corporation differ from a person who buys a bond in the same corporation?

Question

How does a stockholder in a corporation differ from a person who buys a bond in the same corporation?

Answer 1

Bond holders hold a priority over stock owners if it came to bankruptcy or liquidation of the company.  Preferred stock holds a priority over common stock holders. (Uniform Commercial Code)

Answer 2

A share of stock is ownership, or equity in the corporation. Most common stocks are voting stocks, authorized one vote per share at shareholders meetings where directors are elected and other shareholder issues are voted on.

A bond is debt, money lent to the corporation. Holders of bonds are not authorized to vote in corporate matters.

If the company were go have financial difficulties, such as a bankrutpcy, the debt would be paid before the shareholders received any "assets" of the corporation.

Preferred stock, may or may not be voting stock, and usually, if the company were go have financial difficulties, such as a bankrutpcy, the prefered shareholders would receive any "assets" of the corporation before the common shareholders.

The purchasers of bonds still have priority in such cases, over all shareholders, common and preferred.