Preferred shares are a type of equity security that gives shareholders a higher claim on assets and earnings than common shares. They typically pay fixed dividends, which means investors receive regular income, making them attractive for those seeking stability. However, preferred shareholders usually do not have voting rights in the company. In the event of liquidation, preferred shareholders are paid before common shareholders, but after debt holders. This makes preferred shares less risky than common shares, but they may not appreciate in value as much. Investors often choose preferred shares for their income potential and lower risk compared to common stock.