do not have the option to be convertible to preferred stock
receive worse treatment during liquidationswhile preferred stock and common stock are both equity instruments they share important distinctions first preferred stock receive a fixed dividend as dividend obligations to preferred shareholders must be satisfied first common stockholders on the other hand may not always receive a dividend a company may fully pay all dividends even prior years to preferred stockholders before any dividends can be issued to common stockholders second preferred stock typically do not share in the price appreciation or depreciation to the same degree as common stock the inherent value of preferred stock is the ongoing cash proceeds that investors receive common stock on the other hand are more difficult to value however because they are not tied to semi fixed payments investors hold common stock for the potential capital appreciation lastly the two types of equity have different terms or conditions preferred stockholders typically have no voting rights whereas common stockholders do preferred stockholders may have the option to convert shares to common shares but not vice versa preferred shares may be callable where the company can demand to repurchase them at par value preferred stock also receives better treatment during liquidations preferred stock vs bondsoften issue periodic ongoing cash paymentsissued at par value which is independent of market value dividends may increase decrease or end at a company s discretionpreferred stockholders are behind bondholders during bankruptcy or liquidationsoften do not have an end dateoften issue periodic ongoing cash paymentsissued at par value which is independent of market value interest is fixed and will not change over the life of the bondbondholders receive preferential treatment during bankruptcy or liquidation