ms and circumstances. Common stock may be issued in different classes, usually as Class A and Class B stock. These classes may carry different rights in terms of voting and payouts, with the controlling class being available only to shareholders approved by the other holders of voting shares. The other class of shares allows outsiders to participate in the earnings and capital gains of the firm without rights in issues of corporate governance. The SEC frowns on such arrangements, which are not generally allowed by the rules of the NYSE, so that some corporations list their different classes of stock on other exchanges in order to maintain narrow control.
             Preferred stock functions much like a bond: while it represents a share of equity in the corporation, it has a fixed payout, and its price usually fluctuates based on the level of interest rates rather than on the change in value of the enterprise. Preferred stock par value is important because it establishes the level of the contracted payout. Preferred dividends must be paid before any common stock dividends. With cumulative preferred stock, dividends owed accrue until paid, so that all outstanding preferred dividends must be paid in full before any common stock dividends.
             Unlike bonds, preferred stocks have no maturity date and generally are permanent obligations of the corporation unless retired. Participating in preferred stocks allow holders to share in additional special dividends if such are declared, while convertible preferred can be converted into shares of common stock at the holder's discretion under certain conditions. Preference stock generally refers to a senior issue of preferred which takes precedence over subsequent issues. In case of liquidation of the corporation, preferred shareholders would be paid off before common shareholders; however, in such cases there are hardly ever enough remaining assets to satisfy such claims.
             Unlike some other countries which ma...