Therefore, takeovers are generally not an issue. Thus, although there is substantial separation of the ownership and the control of large corporations, there are several implicit controls on management that encourage it to act in the interests of the shareholders.     Characteristics of Common Stock   The two most important characteristics of common stock as an investment are its residual claim and limited liability features. Residual claim means that stockholders are the last in line of all those who have a claim on the assets and income of the corporation. In a liquidation of the firms assets the share- holders have a claim to what is left after all other claimants such as the tax authorities, employees, suppliers, bondholders, and other creditors have been paid. For a firm not in liquidation, shareholders have claim to the part of operating income left over after interest and taxes have been paid. Management can either pay this residual as cash dividends to shareholders or reinvest it in the business to increase the value of the shares.     2 A corporation sometimes issues two classes of common stock, one bearing the right to vote, the other not. Because of its restricted rights, the nonvoting stock might sell for a lower price. I. Introduction 2. Markets and Instruments The McGraw−Hill Companies, 2001           CHAPTER 2 Markets and Instruments 45     Figure 2.10 Stock market listings.