Question

Which is the better investment – ordinary shares with a par value of OMR 0.500 per share, or ordinary shares with a par value of OMR 2.000 per share? Why?                                                               

Answer 1

It depends on number of other variables but 2 most important factors are below

1. Dividend payout rate which depends on Par value of the stock

2. Issue price of the shares because If shareholders pay less than the par value for a share of stock and the issuing company later becomes unable to meet its financial obligations, its creditors can sue shareholders for the difference between the purchase price and the par value to recoup the unpaid debt. If the market price of the stock falls below the par value, the company may be liable to shareholders for the difference. Most companies opt to set a minimum par value for their stock shares to circumvent either of these scenarios

So, if we assume if other factors is same for both the ordinary shares then having more par value is better assuming issue price is equal to par value