¶ … E-commerce, efficiency in terms of time and cost has been experienced by almost every sector of the economy. International markets came closer and economic participation in every market increased significantly as it became easier for buyers and sellers to communicate. This had also affected the Stock exchanges or the stock markets.
With the cyber world taking over the conventional corporate climate, in the recent past, online financial services, brokerage houses and trading portals sprang up. This trend not only triggered participation from existing investors but also attracted newer smaller investors. Moreover, the cyber fever also changed the way companies offer and sell stocks to the market.
Corporations are private sector business ventures with a limited liability. Moreover these businesses are incorporated and can issue stocks in order to generate finances. There are two major types of corporations: private limited company and public limited company. In a private limited company the stocks can only be issued to a limited number of people, generally those within the business. This means that shares cannot be issued to the general public. On the other hand, a public limited company is listed on the stock exchange and can issue shares to the general public. In both the cases, the shareholders have a right of ownership in the company with each share having a voting right. All shareholders get a share in the company's profits in form of a 'dividend' (Emerson, 2009).
As technological advancement grew rapid and the advent of information technology triggered E-commerce, like any other business sector, it also created a new revolution in the financial sector. Online and Internet banking, online mutual funds accounts and online brokerage houses became very common. In the pre-internet era, where a new investor had to take the pains of paying a personal visit to the brokerage house can now easily make his investment decision and make dealings through user friendly brokerage websites. Not only that, but other services such as Annual Reports and Securities and Exchange commission filings and other relevant documents are also accessible at the ease of a click. The incorporation of internet in stock markets and financial institutions are now a two way stream that is producer to consumer and vice versa. This is not only because of the ease, convenience and time efficiency that it provides but also the efficiency in terms of costs.
ver the years, telecommunication technology has improved not just in the western world but across the globe. Not only developed but the less economically developed countries are also now enjoying the accessibility to the World Wide Web. This has resulted in the increase in globalization and in turn, paved way for the advent of E-commerce (Lauden & Traver, 2008). When Ecommerce came took over, there was a notion that it is only going to benefit the B2B sector (Plant, 2000). However, proving the myth wrong, it went on to target the mass consumer market. This became evident when huge online shopping arenas started to spring up all over the internet. From groceries to garments to holiday trips, everything can now be purchased from anywhere in the world in one click. Initially, people were still reluctant to freely give their payment details. Credit card thefts were a serious issue. Then came more secure websites that ensured never like before secured payment options. With Verisign and PayPal entering the cyberspace, online shopping has seen a phenomenal growth. This evolution of E-commerce, which initially attracted cyber consumers to petty transactions such as small budget online shopping later evolved into a global market of multi-digit transaction. Like many other industries, even the stock markets enjoyed the benefits brought in by the new trends if cyber markets.
The Stock Markets
There are various types of shares that can be issued each having their own characteristics and benefits.
Debentures
Although debentures are not stocks by nature and are more like loans, they are issued to the general public and are traded in stock exchange. When the company announces its profits, debentures are paid out first, a fixed amount of interest rate as mentioned on the debenture certificates. Debenture holders can sell their debenture certificates further to for cash. Although debenture holders are the first one to get paid and are paid whether or not the company makes a profit, they have no say in the decision making and have no voting rights.
Preference Shares and Cumulative Preference Shares
Preference shares get the first preference (after debentures) when dividends are paid out. Cumulative preference shareholders enjoy an additional advantage that if in...
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