Date of Award
Doctor of Philosophy
1. Research Problem. The general aim of this research is to provide investors and academics with a better understanding of TSE traded straight preferred stocks as an investment vehicle. More specifically, the thesis describes the major market characteristics of preferred stocks traded on the TSE over the period 1957-1980; it examines the overall risk-return characteristics for these stocks and it analyzes the effect of preferred stock features and the taxation of preferred income on the risk-return characteristics of preferred stocks.;2. Research Methodology. This research required three stages: Stage I involved the identification of the information necessary to answer specific research questions. Stage II consisted of data collected from raw sources and the construction of a large computerized data bank for 373 issues of TSE straight preferred stocks traded over the period 1957-1980. The data bank contains information about the terms of each issue, their trading characteristics and market indexes. Stage III was dedicated to the specific methodologies used to answer each research question. The issuers of preferred stocks were compared to other firms. An analysis of the distribution of the returns for these stocks and the estimation of their risk characteristics was performed. Some statistical tests were used to look at the effect of the terms and marketability of each issue on its risk-return relationship. Residual analysis was used to verify the impact of tax changes on preferred stock returns.;3. Results and Conclusions. This study shows: (1) that the issuers of TSE traded straight preferred stocks are large firms with higher leverage than firms in general; (2) that those stocks had higher yields than long-term bonds at the beginning of the period under study and lower yields at the end of the period; (3) that their risk-return characteristics place these stocks between bonds and common stocks; (4) that the CAPM is useful in explaining the risk of TSE traded straight preferred stocks; (5) that liquidation preferences, partial retirement plans and the strictness of dividend payments reduce the risk and the returns for preferred stocks and (6) that changes in the Canadian taxation system have had an impact on the prices and returns of preferred stocks.;4. Implications. While this study provides researchers with a large data bank on preferred stocks, it also gives investors a better understanding of these stocks. This research describes the market for preferred stocks, their risk-return characteristics and the sensitivity of these stocks to tax changes.
Thibeault, Andre, "Returns To Canadian Straight Preferred Stocks (1957-1980)" (1985). Digitized Theses. 1400.