What would be the incentive for a company to authorize "Preferred Stock" when the company already has common stock? Is Preferred Stock seen by management as another access to capital, similar to a line of credit or loan? Lastly if possible to answer, what are some of the reasons a company would authorize preferred stock, but not issue the preferred stock?
Preferred Stock Authorized
Availability of the option to access capital? As the name implies, Preferred stocks have priority over Common Stocks and most likely have more voting power. This makes it more appealing to investors....again, in case the company needs the capital.
Filed Under: Credit & Capital