S U M M A R Y
GENERAL THEORY OF THE VALUE OF RIGHTS by Dr A . I. Diepenhorst.
T h e generally accepted theories as reg ard s the value of rights and its im portance proceed from special suppositions regarding the factors which determ ine the value of a sh are and regarding the yield of the new capital in the case of new issues.
In deviation from this a general theory has been developed of the value of rig h ts w ith the aid of a simple algebraic analysis, supported by an isoquant diagram in which the suppositions are restricted to the absolutely necessary minimum. In this w ay it is proved that, assum ing the values of the share ■—> ceteris paribus ■— to be indirectly proportional the num ber of shares placed, the value of the rights alw ays fully com pensates the depre ciation in values which the shares th at have alread y been placed will un dergo as a result of issuing at a price low er th an the highest one possible. N e x t an exposition is given of the generally accepted theories as reg ard s the value of rights. T h u s the theory of the expansion reserve as developed by T h . Limperg Jr., the theory of the yield value, w hich m ay be considered to be represented a.o. by A rth u r Stone D ew ey, L ester V . Plum, Joseph H um phrey, E u g en Schm alenbach and A. G. M . van Keep and finally the theory of the intrinsic value are discussed. O f each of these theories the special suppositions from w hich th ey proceed are exam ined w ith the aid of the analytical m ethod, the tenability of these suppositions being subjected to a critical exam ination.
F inally it is pointed out th a t the general theory offered should be con sidered no t as a prognostic instrum ent, bu t exclusively as a functional explanation of the value of rights and as a justification in principle of the exem ption from taxation of the yield of rights.
