I'm generally interested in how economy works, because i think it closely relates to businesses. I would like to ask something about stocks. Imagine that there is a company with 100 stocks. Now, the owners are like :
Owner1 has 40 stocks Owner2 has 30 stocks Owner3 has 20 stocks Owner4 has 8 stocks Many owners, say Owner5, have 2 stocks (could be employees).
Now, the question is, what is the process happening when maybe Owner1 and Owner2 decide that it would be a good idea to increase the stocks of the company.
Now, if i understand well, raising stock would be a nice way to get some more money. However, raising stock would also affect the ownership percentage of all existing parties, since more parties would be involved. So :
Why would owner5 accept that ? It would lead to his shares having a lower value. I understand that there may be clauses where his stocks can be bought back, but what if not ? What if he decides that he does not want to jeopardize his current stocks ? Also, Owner1, as probably more rich, could be buying the new stock, thus increasing his company share. Why would owner5 allow that if the company is profitable ?
The only point i see is that of receiving some direct money(2% of the new stocks), but does it really work this way ?