what is participating preferred stock 
participating preferred stock is a type of preferred stock that gives the holder the right to receive dividends equal to the customarily specified rate that preferred dividends are paid to preferred shareholders as well as an additional dividend based on some predetermined condition participating preferred stock can also have liquidation preferences upon a liquidation event understanding participating preferred stockparticipating preferred stock like other forms of preferred stock takes precedence in a firm s capital structure over common stock but ranks below debt in liquidation events the additional dividend paid to preferred shareholders is commonly structured to be paid only if the amount of dividends that common shareholders receive exceeds a specified per share amount furthermore in the event of liquidation participating preferred shareholders can also have the right to receive the stock s purchasing price back as well as a pro rata share of any remaining proceeds that the common shareholders receive 