On the Pricing of Preferred Stock

Eric H. Sorensen and Clark A. Hawkins

Journal of Financial and Quantitative Analysis, 1981, vol. 16, issue 4, 515-528

Abstract: Historically, preferred stock ranks well below common stock and bond issues as a source of financing in the private capital market. Relative to issuance of bonds, the issuance of preferred stock burdens the issuer with a fixed financing cost without benefitingthe issuer with the tax deductability associated with interest payments.

Date: 1981
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