Why the Par Value of Share Matters to Investors

Tadeusz Dudycz and Bogumiła Brycz
Additional contact information
Tadeusz Dudycz: Faculty of Computer Science and Management, Wrocław University of Science and Technology, 50-370 Wrocław, Poland
Bogumiła Brycz: Faculty of Computer Science and Management, Wrocław University of Science and Technology, 50-370 Wrocław, Poland

IJFS, 2021, vol. 9, issue 1, 1-20

Abstract: The purpose of the study is the analysis of the relationship between the par value (also known as nominal value or face value) and the parameters influencing a company’s financing. Additionally, the utility of the par value as a manipulation tool for equity offerings is examined. The study is based on a sample of IPO firms which went public on the Warsaw Stock Exchange. The study finds that an excess supply of shares has a negative impact on their valuation. In contrast, decreasing the par value prompts perceptual biases among investors beneficial to the success of the issuance. Moreover, share capital is found to be a useful signaling tool to improve the company’s position on the financial market.

Keywords: par value; financing; share premium; share capital; signaling; face value; nominal value; share price psychology; IPO; WSE (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7072/9/1/16/pdf (application/pdf)
https://www.mdpi.com/2227-7072/9/1/16/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijfss:v:9:y:2021:i:1:p:16-:d:517896

Access Statistics for this article

IJFS is currently edited by Ms. Hannah Lu

More articles in IJFS from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().