Contingent Equity and the Dilutive Effect on EPS.
分析了APB意见第15号规定的修正库存股法在计算稀释每股收益时的两个缺陷：引入利率等外生因素，以及在行权价高于股价时仍适用，导致稀释效应被削弱甚至消失，且易受管理层操纵。
Abstract This paper analyzes the modified treasury stocks (MTS) method mandated by APB Opinion No. 15 for computing diluted Earnings Per Share (EPS) figures in cases where warrants are outstanding. It is shown that the MTS method suffers from two basic deficiencies. First, it assumes that funds obtained from exercising the outstanding warrants are used to reduce debt or to purchase Government securities. This introduces exogenous factors (e.g., interest rate) into the process of computing diluted EPS. Second this method is applicable even in those cases where the exercise price of the warrant exceeds the share price. As a result of these deficiencies, dilutive effects are often reduced and even nullified under certain conditions, Moreover, these effects are subject to managerial discretion and, hence, potential manipulation.