Capital Issues Evaluating Changes in Capital Structure Capital stock is the lifeblood of the modern public corporation.
Equity allows growth.
It s the primary currency for mergers, acquisitions, and compensation plans. Stock also represents institutional investors sole ownership interest in the underlying company. Shareholders expect boards to be good stewards of this valuable resource. In recent years, however, some companies have wasted capital on unwise diversification schemes, bad mergers and solid gold option plans. As a result of these actions, shareholder approval of capital increases isn t guaranteed.