CHAPTER 2
THEORETICAL FOUNDATION
2.1 Literature review
2.1.1 Definition and type of stocks
2.1.1.1 Definition of stock
Stock is a marketable securities that published by emitent
companies listed in stock exchange. It declares that the shareholders are the
part of companies’ owner. (Madura, 2010)
2.1.1.2 Type of stocks
According to Gittman (2004, p.92) , stock can be classified
within two categories :
1) Common stocks
Shareholder is the company’s owner that represents management of
corporation for the operational. As the owner, common shareholders have
several rights :
a. Right to control
Common shareholders have the right to vote the board of dir ectors and
major issues in company. It means that they have the right to nominate
resolutions in the annual meeting of shareholders.
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