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ON PREFERRED STOCK
Author(s) -
Fooladi Iraj,
Roberts Gordon S.
Publication year - 1986
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.1986.tb00464.x
Subject(s) - stock (firearms) , incentive , economics , restricted stock , empirical evidence , financial economics , monetary economics , econometrics , business , microeconomics , stock market , philosophy , epistemology , mechanical engineering , paleontology , horse , engineering , biology
Preferred stock is issued by many corporations in spite of its apparent disadvantages. This study explains why. A simple partial equilibrium model is presented in which preferred shares are both supplied and demanded. Stronger tax incentives in Canada than in the United States may create a positive preferred equilibrium. Empirical evidence on the relative use of preferred stock in the two countries is presented to support this hypothesis.