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Actually the stockholders are last in line -- "profit" is what is left over after all the other expenses are paid. Employees are entitled to their wages as lon
by betterunix2 7y ago
Actually the stockholders are last in line -- "profit" is what is left over after all the other expenses are paid. Employees are entitled to their wages as long as they are employed; stockholders are not actually entitled to anything and may never see any return on their investment. Before stockholders can be paid, a company must pay its employees, its suppliers, its taxes, its bondholders, etc. That is the risk a stockholder accepts.
It is wrong to think of a stockholder as having given a "loan," because that is not what stock represents. Stock represents an ownership stake in a business, and ownership is perpetual (a perpetual loan makes no sense -- it is not a "loan" if it can never be repaid).
Stock ownership is transferable for a publicly traded company, which is why someone who did not buy their stake directly from the company can be entitled to all the benefits of someone who did. This is a good thing because it reduces the risk of investing -- if you invest in a company, and later on find yourself short on cash, you can sell your shares (though it may be for less than you paid, but that's just how it goes when you own something). If the buyer of your shares were not entitled to the same benefits as you, why would they buy the shares in the first place?
That is also why a company ultimately serves the interest of its shareholders -- they are the owners. That is how a capitalist system works, so if you think this is problematic then you really have a problem with capitalism. What sort of system would you like to see? Communist systems have not been nearly as successful historically (which is why there are so few remaining) and socialism has only worked well as means of supporting capitalism (e.g. providing people with food, healthcare, education, transportation, and whatnot so that they can participate in a capitalist system in a meaningful way).