> Why do people buy common shares which give them no voting rights as a shareholder?
Because you believe in the people who have the voting rights?
Let's get real here: for those of us buying stock with voting rights, we don't really have voting rights. The proportion we have is so vanishingly small it's the same as not having voting rights in the first place.
No it doesn't, you can not own shares in a company and still have it affect you. You can also own shares and have no voting rights, either.
Share ownership is, as it stands, undemocratic in the sense that there is no democratic decision making by all of those who are affected by a company. And a model where wealth decides how many votes you get isn't very democratic, either.
> you have 14% of company but have 65% of voting rights
Good point. It makes no difference if the other shareholders have 1 or 0 votes per share. They have no control of the company, they just loaned it money - in practice they have variable yield bonds.
Also, viewed that way, the company has a much smaller market cap and a huge debt.
> So you own something, but have absolutely no rights to the profits and practically no decision making power. In the spirit of the usual definition of "owning" something, you do not own anything with stocks.
I would disagree.
I can sell those stocks I own and (hopefully) get more money than I paid for them. Sometimes they pay me a dividend too (share of profits). Sounds like ownership to me. I don't care about decision making power within the company. I LIKE that I have delegated that responsibility.
> If you really want to own a stock that gives you no profits, no income from dividends, no voice in how its run, and actually no value what so ever other than the greater fool theory then go ahead.
I guess I'm a fool, because I take zero interest in participating in any of the stocks I've bought, apart from just monitoring the latest price and watching them (hopefully) go up.
Voting rights or not makes no difference to me.
But I suspect most individual / non-institutional investors are like me. So when I see people get upset about voting rights, it's really just a small number of very self-interested and deep-pocketed parties (activist investors, etc) with their own opinions of how a company should be run, and I don't as-a-rule agree with their opinions.
> It just feels morally wrong that someone owning 20% or 15% of company controls 50+% of the votes.
Shareholders don't really "own" a company in the traditional sense. They own a specific package of claims against the company in the event of dissolution, voting rights, etc. In the simple case of a company with one class of shareholders, the analogy between owning X% of the shares and owning X% of the company is fairly close, when you have differentiated share classes that analogy is less close.
And shareholders own because they choose to acquire the stock under specific terms. If they don't like the terms, they can just not accept the deal that would give them the stock. I don't see how its morally wrong that someone that bought a set of claims that don't include voting rights, or include smaller voting rights than some other set of claims, has exactly what they bought.
> The other stockholders are almost never your adversaries. Their interests are in alignment with yours: to vote in such a way that it maximizes the value of the stock.
Nope. Their interest is to vote in such a way that it maximizes the value of their portfolio. If that doesn't match your portfolio, then your interests are not aligned.
> The only exception would be some kind of action that is specifically discriminatory towards your shares over theirs, which is typically not legal.
There is nothing discriminatory about voting for selling a division of company A to company B, say, and it is certainly not illegal. But it might well still be in the interest of the owners of company B who also happen to hold the only voting 10% of company A, and to the detriment of the owners of the other 90% of company A.
Suppose index funds collectively own 80% of the shares. If they don't vote or do something that causes their vote to equal the other shareholders, someone else can buy 10% of the shares and effectively have majority voting power, or even fewer than that since most likely some of the other non-index fund owners wouldn't vote either.
The problem is that you need somebody who is paying attention to be in control of the company. Putting that on management is problematic because they obviously have different interest than owners, e.g. on matters of executive compensation or whether to return profits to shareholders instead of using them to build a personal empire/reputation or funneling money to cronies through mergers and acquisitions.
> No, you buy them because you want to support good, non-nefarious companies with sound business models.
No, you really are buying the company stock because of current and future profit prospects. None of this supporting thing... a shareholder is just the owner of the share, nothing more.
> So then you agree that there could be situations where only a couple percent of the ownership of a company is available on the market, and if you buy all of those shares, then you would not control the company?
Sure, it's possible that at any given time people aren't offering to sell a majority of the voting power of stock, or (theoretically, at least) any voting stock at all (it's even possible that the only class of stock trading on the market is nonvoting; SNAP I think does that.)
I was taking issue with the particular claim, made twice in the direct chain of ancestry of this comment, that a company could simply hold the majority of it's voting stock itself, so that holding 100% of the shares not owned by the company would not give you control since the company itself (presumably, it's management) would exercise most of the voting rights. It doesn't work that way.
> When you buy stock you stop caring about what the company does.
> You only care about what the market thinks about what the company does
I’m not sure I’m getting your point. What the company does affects what the market thinks what the company does. I mean sure, feedback is not instantaneous and there have been quite a big mismatch especially recently. But I think it still comes down do execution in the end.
> For companies that don't pay dividends, the stock price is driven purely by the expectation that somebody will pay you more for the stock than what you paid for it
Yes this is why people buy stocks. What the company does will affect the future expectation.
> We have 3 classes of stock: Class A shares which have 1 vote, class B shares, which have 20 votes, and class C shares which have 20 votes. All classes vote alongside each other.
I wouldn’t consider being an investor in this company unless class B or C shares are publicly traded. Just look at the underperformance of GOOGL, SNAP, and SQ for reasons why not to be an investor here.
> Voting shares don't have to have monetary value.
:facepalm:
If you control a company worth $1T, someone is going to be willing to buy your share. If you're implying that voting shares don't have to be transferable, the question becomes how do you pick the next leader? The current owner gets to appoint the next in line? That's basically monarchy. The history I was taught says that only those at the top thrive under monarchy.
> Sure, but how is that different than other investments such as stocks or bonds?
Since stocks are how one owns a corporation, it's literally exactly the same as stocks, which are not an “other investment”.
Of course, there is a manifest difference between controlling enough stock that one determines, among other things, if, when, and how much a corporation distributes back to shareholders and, well, not controlling that much. But the same issue, in principal, exists with shareholders collectively as with a single shareholder individually, though coordinated action becomes harder with larger numbers.
Depends on which stock you bought.
> does not allow for control
One share equals one vote. The more shares you buy, the more you vote.
> The centralization of returns and control reinforce one another
With stocks you get the same returns and votes per share that anyone else does.
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