A Guide to the New Language of Accounting and Finance

P

Par Value is the stated face value of a bond or, in the case of stock, an amount assigned by the company and expressed as a dollar amount per share. Par value of common stock usually has no relationship to the current market value and so no-par value stock is issued. Par value of preferred stock is significant, however, as it indicates the dollar amount of assets each preferred share would be entitled to in the event of liquidation of the company. The issue of par values has not received much research attention but a very thoughtful article by Pennacchi, Vermaelen, and Wolff (2014) on call option enhanced reverse convertible (COERC) incorporates the subject.

Preferred Shares issued by a company have specified rights and privileges. Preferred ...