Holders of shares of common stock in a corporation have a "prior claim" over the company's earnings or its assets.

Question

Quizplus · Accepted Answer

Holders of shares of common stock in a corporation have a residual claim over the company's earnings and assets, meaning they are entitled to whatever is left over after all other claims (such as debt payments and preferred stock dividends) are satisfied. Therefore, they do not have a "prior claim."

Holders of Shares of Common Stock in a Corporation Have