Shareholders probably prefer antidilutive convertible securities over
diluted because it sustains the earnings per share and does not
increase outstanding shares. Dilutive convertible securities could be
seen in a negative light by shareholders because they mean a
negative in earnings per share and an increase of outstanding shares. a
As diluted earnings per share gives the earnings per share including all
potential common shares that would decrease earnings for share
(2017, Whalen). Some dilutive securities are warrants, convertible
preferred stock, and convertible bonds. So, if you were to own a
certain percentage of a company dilutive securities were in play then
you would then own less of the company than you originally did. If it
were antidilutive securities then that is when the company would
give you the chance to purchase more shares, with this then you
would still own the same amount of the company as you did
previously.
References:
Whalen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate
accounting: Reporting and analysis. Boston, MA: Cengage Learning.
