Each type has distinct characteristics plus advantages and disadvantages, depending on an investor's needs and investment objectives. The type of equity securities with which most people are familiar is stock. If a company does not do well, however, its stock may decrease in value and shareholders can lose money.
Stock prices are also subject to both general economic and industry-specific market factors.
As owners, shareholders generally have the right to vote on electing the board of directors and on certain other matters of particular significance to the company. Under the federal securities laws, most companies must send to shareholders a proxy statement providing information on the business experience and compensation of nominees to the board of directors and on any other matter submitted for shareholder vote. This information is required so that shareholders can make an informed decision on whether to elect the nominees or on how to vote on matters submitted for their consideration. The most common form of corporate debt security is the bond, a certificate promising to repay, no later than a specified date, a sum of money which the investor or bondholder has loaned to the company. Since bondholders are not owners of the company, they do not share in dividend payments or vote on company matters.