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Why might an investor-owned firm choose to issue different classes of common stock?

Question

Why might an investor-owned firm choose to issue different classes of common stock?

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Step 1

An investor owned firm issues different classes of common stock mainly due to the difference in voting rights. The different classes of common stock are normally denoted as class A and class B. Companies assign higher voting rights to one class compared to the other. Usually higher voting rights are given to class A shares. However, there is no standard nomenclature followed for different classes of common stock.

Step 2

Voting rights gives a shareholder the right to vote on the matter of policy making on corpo...

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