Question

Investors purchase common stock as a way to increase their income. As stockholders, they earn the right to vote on company business. Write a paragraph that tells why a stockholder might wish to exercise his or her voting rights.

Answer 1

A stockholder may exercise voting rights to influence corporate governance and decisions that affect the company's future and, consequently, their investment's value. Voting allows shareholders to shape policies and strategies for their financial benefit.

Step-by-step explanation:

A stockholder might wish to exercise his or her voting rights because as shareholders of a public company, they have a say in critical corporate governance decisions. This includes voting for the company's board of directors, who have significant influence over the company's strategic direction and management. The weight of a shareholder's vote is proportional to the number of shares they own, meaning the more shares an investor holds, the more influence they potentially have over company decisions. Influencing these decisions is not only crucial for the company's future and profitability, but it also directly impacts the value of the shareholder's investment. Hence, shareholders may actively exercise their voting rights to shape corporate policies in a way that maximizes their returns and aligns with their interests, such as dividend policies, mergers, and acquisitions, or broader strategic aims.