Preferred Stock Authorized
When a company has already issued common stock, why would it also authorize preferred stock? Does management view it as a financing tool similar to a credit line? What considerations lie behind authorizing without issuing? Based on industry practices, this article outlines the multiple strategic intentions behind preferred stock authorization.
What would be the incentive for a company to authorize "Preferred Stock" when the company already has common stock? Is Preferred Stock seen by management as another access to capital, similar to a line of credit or loan? Lastly if possible to answer, what are some of the reasons a company would authorize preferred stock, but not issue the preferred stock?