What does a shareholder represent in a corporation?

A shareholder represents a buyer of corporate stock and, consequently, an owner of the company. When individuals purchase shares of a corporation, they acquire a stake in that company, representing a claim on a part of its assets and earnings. This ownership can come with certain rights, such as voting on major corporate decisions, attending annual meetings, and receiving dividends if the corporation distributes profits.

Shareholders play a significant role in the governance and direction of the company, as their investment often influences the strategic decisions made by management. This ownership is distinct from the roles filled by employees or managers, who may work within the corporation but do not necessarily have ownership stakes. Unlike a business partner, who actively engages in running the business, shareholders may not be involved in daily operations, focusing instead on their investment in the company's performance and growth.