Buisness Finance

Buisness Finance

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This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1917 edition. Excerpt: ...the period when the dividends will be increased to a normal level of 10% or 12%, and in view of this expectation the stock will probably sell at a high figure. We will suppose, however, that the directors, in place of building up a surplus and getting ready for regular 10% dividends, decide to grant a special subscription privilege worth $5 to $10 per share, in this way increasing the amount of capital stock upon which dividends must be paid and making it impossible to expect more than the indefinite maintenance of 8%. dividends. What will be the result? The shareholder, to be sure, will have obtained his subscription privilege, which is desirable, but he will have lost perceptibly in the market value of his holdings and he will have lost the chance of a permanent increase in dividends within the near future. On the other hand, let us suppose that the directors have raised their new capital by having the preferred stock underwritten at or about its market price. Assuming that this new capital could be used as advantageously as the old capital, they are in position to go ahead a little later with the expected increase in dividends. From the standpoint of the permanent owner of the corporation's shares, there can probably be little question but that the steady and dependable dividend policy better serves his interests. It is only from the point of view of the speculative purchaser that the granting of special "rights" and bonuses with the resulting rapid fluctuations in stock market prices is desirable. Sometimes, it may regretfully be admitted, the directors of a corporation find it to their personal advantage to know in advance that the granting of a subscription privilege is anticipated. On the basis of private information, ...show more

Product details

  • Paperback | 188 pages
  • 189 x 246 x 10mm | 345g
  • Rarebooksclub.com
  • United States
  • English
  • black & white illustrations
  • 1236800737
  • 9781236800732