Stock dividends

Bibliographic data

Monograph

Identifikator:: 175754061X

URN:: urn:nbn:de:zbw-retromon-136496

Document type:: Monograph

Title:: Stock dividends

Place of publication:: Washington

Publisher:: U.S. Gov. Print. Off.

Year of publication:: 1927

Scope:: vii, 273 S.

Digitisation:: 2021

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: The nature of the inquiry

Collection:: Economics Books

STOCK DIVIDENDS While under the wording of the resolution the stock dividends and capitalization of each of these corporations for equal periods before and after the stock dividend decision were all that the commission was required to report, such a comparison would not give an accurate picture of the importance of stock dividends before and after that decision on account of the element of statistical bias resulting from selecting for the comparison only those companies which issued stock dividends after the decislon. This bias is explained in the following excerpts from a memorandum from the chief economist to the commission dated December 30, 1926, written in view of the wording of the last clause of the preamble of the resolution, which clearly indicates the desire of the Senate to “be fully informed as to the extent of this practice” (stock dividends) for purposes of legisla- tion. In answering Senate Resolution 304, regarding corporations that have paid stock dividends, one method of procedure would be to consider only corporations that have paid stock dividends since March 8, 1920 (the date of the stock dividend decision). * * To do this, however, would not be a scientific procedure, nor would it con- stitute a fair presentation of corporation stock dividend policy, because there are probably many of them which paid stock dividends prior to 1920 which have paid none since. To answer the resolution properly, therefore, it is desirable that corporations paying stock dividends prior to 1920 should also be asked to furnish their dividend data since that date. In accordance with this memorandum the commission on January 26, 1927, authorized the broader inquiry. Following this ruling the names of all corporations which were reported to have issued a stock dividend, or appeared to have done so, in any one of the seven years from 1913 to 1919, inclusive, were drawn off from the financial publications mentioned above. These names were combined with those reporting the payment of dividends in any one of the seven years 1920 to 1926, inclusive, and, eliminating all duplications, gave a total of over 18,000 names. A schedule (Appendix 2) was then prepared and mailed to each corporation on the list. This schedule requested the corporation to report (1) the amount charged against surplus on account of (a) cash, (b) stock, and (¢) “other dividends’’ paid in each year from 1913 to 1926, inclusive, and (2) the (a) outstanding capital stock, (b) surplus shown by the books, and (¢) date of closing for each of the 16 years 1912 to 1927, inclusive.’ Neither the cash and other dividends nor the surplus were called for specifically by the resolution, but in order to Fi advise the Senate as to the importance of stock dividends, this information was deemed necessary for the purpose of making certain comparisons hereinafter presented. In addition, the surplus data were regarded as, and subsequently proved to be, a valuable check on changes in capitalization through the issuance of dividends and otherwise. None of these three items, however (surplus, cash, or other dividends), has been shown for any specific corporation, as this was not called for by the terms of the resolution nor necessary for a proper pre- sentation of the facts. Their sole use has been in the preparation >. 4 1 Capital stock and Sorps were requested for 16 instead of 14 years in order to cover gorperationy with either a calendar year or fiscal year closing and to obtain the capitalization and surplus as of the begir ning of the first year and end of the last year for the entire period.

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