Antidilutive
Definition of 'Antidilutive'A term describing the effects of securities retirement, securities conversion or corporate actions (such as acquisitions made through the issuance of common stock or other securities) on earnings per common share (EPS), where EPS is increased for shareholders.A transaction is considered to be antidilutive if its effect is to increase the amount of EPS, either by lowering the share count or increasing earnings. A second use of the term refers to ownership rights, whereby existing shareholders in a certain class of shares have rights to purchase additional shares when there is a new issuance of securities that would otherwise reduce the ownership percentage of existing holders. This is called an anti-dilution provision. |
|
Investopedia explains 'Antidilutive'Although most commonly used in reference to convertible securities whose exercise would have the effect of increasing EPS, the use of the term "antidilutive" has become much more comprehensive.For example, if Company A acquires Company B by using its common stock, but the earnings of Company B add more to EPS than the common stock issued, it is said to be an antidilutive acquisition. |
Related Definitions
Articles Of Interest
-
The "True" Cost Of Stock Options
Perhaps the real cost of employee stock options is already accounted for in the expense of buyback programs. -
A New Approach To Equity Compensation
The new financial accounting standard known as FAS 123R could take a bite out of your portfolio. Find out why here. -
Convertible Bonds: An Introduction
Find out about the nuts and bolts, pros and cons of investing in bonds. -
Trademarks Of A Takeover Target
These tips can lead you to little companies with big prospects. -
What is dilutive stock?
Dilutive stock is any security that dilutes the ownership percentage of current shareholders - that is, any security that does not have some sort of embedded anti-dilution provision. The reason ... -
Why do share prices fall after a company has a secondary offering?
The best way to answer this question is to provide a simple illustration of what happens when a company increases the number of shares issued, or shares outstanding, through a secondary offering. ... -
Pay Attention To The Proxy Statement
Don't overlook this overview of a company's well-being. -
How Risk Free Is The Risk-Free Rate Of Return?
This rate is rarely questioned - unless the economy falls into disarray. -
Top 4 Most Scandalous Insider Trading Debacles
Here we look at some of the landmark incidents of insider trading. -
Nobel Winners Are Economic Prizes
Before you try to profit from their theories, you should learn about the creators themselves.
Free Annual Reports