@anon22726 – Par value is determined by the company who is opening the stock to trading. The par value is generally considered to be a dollar amount that represents the value of each share in terms of the cash and/or goods that were required to generate that share.
Basically, for every share of stock, a certain amount of cash, goods, and services was required to provide that stock. The par value is the lowest price the company is willing to accept for what they have done to create that stock.
Think of it as a company is divided into 20 stocks. In order to determine the lowest value that would be acceptable for the stock, the company determines a dollar value that represents the amount of cash, goods, and services that were required to generate 1/20 of the company.
This dollar value is then assigned as the par value of the stock. In this way, should stock prices fall so drastically that the value of the stock would have gone below the par value, the company is protecting itself and its investors from losing everything by investing in the company. This then provides the company with capital to build itself back up so that the stock price can rise again.