CRPS: type of preferred stock that contains debt

like redemption feature requiring issuer to pay

Background: examine market perception of a holder at par value for preferred stock as
compound financial instruments, convertible specified redemption date
redeemable preferred stock

Provide at least some evidence that current

accounting rules for CRPS are at variance with
investor perception CRPS
Research design & model development: examine
relationship between stock and price and CRPS as
separate independent value
Conclusion

Classification of financial instruments with characteristic of both debt and equity:

Preferred stock
evidence concerning convertible redeemable preferred stock

Redeemable
preferred stock

Sample selection: use data from compustat

database
implication

Convertible
preferred stock
CRPS is in substance
convertible debt CRPS should be equity