Define: Junior Equity

Business, Legal & Accounting Glossary

Definition: Junior Equity



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Full Definition of Junior Equity


Junior equity is equity that ranks lower than some other equity; more specifically, junior equity is called common stock. Junior equity is called “junior” for any of several purposes. Junior equity ranks behind preferred stock in its claim on company dividends; the latter are promised and guaranteed, while the former depends on either the profits of the company or a decision handed down from the company’s board of directors. In the event of bankruptcy, the holders of junior equity have a lower claim on the company’s assets (and are behind bondholders and other debtholders). The term does not apply to voting rights, however. Except in the case of a narrow class of preferred stock, junior equity has all voting rights.


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Definition Sources


Definitions for Junior Equity are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020