Involuntary liquidation preference

Definition:

A premium that must be paid to preferred or preference stockholders if the issuer of the stock is forced into involuntary liquidation.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Tax differential view (of dividend policy)

The view that shareholders prefer capital gains over dividends, and hence low payout ratios, because capital gains are effectively taxed at lower rates than dividends.

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