Reviewed by John A. Yeakel University of New Mexico
Readers of this important book will quickly discover that the authors were writing from a much broader perspective than is implied by the title. There are extended discussions of the nature and meaning of profit and its relation to surplus. Issues that are not vital to the discussion of no-par stock are included; the chapters on voting and non-voting shares and on treasury stock are cases in point. The work is, in large measure, a treatise on accounting theory for enterprise capital. “To whom does the surplus belong?” is a recurring theme of the authors. The book is also a strong statement for full disclosure on corporate balance sheets.
The text consists of twenty-two chapters of discussion and analysis that comprise the first 288 pages, plus another 243 pages of verbatim excerpts from the statutes of the forty states which, by 1927, permitted no-par stock. The discussion and analysis is exhaustive. It includes such topics as no-par preferred, cash and stock dividends in relation to no-par shares, reorganization, mergers, consolidations, and taxation questions, with repeated emphasis upon the advantages of shares without par value over both par and stated value shares. Although attention is given to potential problems, the authors seem to have viewed no-par shares as a virtual panacea for a wide variety of corporate ailments. The advantages and disadvantages of shares without par value are clearly and concisely listed on pages 43 and 44.
The book is replete with examples—in many cases corporations are named—so that there is no misunderstanding about the con-cepts being discussed. Legal statutes and cases are used frequently to illustrate the analyses. The writing is very clear and understandable. But, because of the authors’ stated desire to make the discussion in each chapter complete in itself, there is a considerable amount of repetition throughout the book. Perhaps, readers will not enjoy reading the entire book at one sitting.
Accounting historians will particularly appreciate the chapter on the historical developments leading to the use of no-par shares in the United States. I have long held that accounting students deserve better explanations of the meaning of, and the reasons for, par and no-par stock than are commonly found in, for example, intermediate textbooks. Textbook authors could significantly improve their chapters on stockholders’ equity if they took the time and trouble to study the first three chapters (45 pages) of Capital Stock Without Par Value.
