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| Author: | Casson, P. Mckenzie, G. |
| Title: | A comparison of measures of earnings per share |
| Journal: | European Journal of Finance
2007 : APR/JUN, VOL. 13:3-4, p. 283-298 |
| Index terms: | accounting standards earnings per share contingent claims warrants |
| Freeterms: | dilution |
| Language: | eng |
| Abstract: | This paper examines alternative methods for computing earnings per share (EPS) for a company with its capital structure consisting of ordinary shares and warrants. The methods for computing EPS are critically evaluated and an alternative measure, the holding period approach, is developed within the framework of contingent claims analysis. There are two types of errors shown to characterize the accounting measures of EPS, the one arising from failure to fully recognize the contingent nature of the warrant, and other arising from the practice of not recognizing instances of anti-dilution etc. |
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