Besides net income, GAAP also requires public enterprises to report earnings
per share data on their income statements. Earnings per share is the amount of
net income associated with each share of common stock. Dilutive convertible
securities increase the number of Common Stock, if exercised. This reduces
the basic earnings per share. Antidilutive convertible securities could increase
a company’s earnings per share, if exercised or converted into Common Stock.
Shareholders usually resist dilution because it lessens their existing equity and
reduces a company’s earnings per share. Shareholders would rather have
antidilutive convertible securities as these protect them by keeping the overall
number of shares outstanding the same. a a
References
Whalen, J. M., Jones, J. P., & Pagach, D. P. (2017). Intermediate accounting:
Reporting and analysis. Boston, MA: Cengage Learning.
The Investopedia Team. (2021). Dilutive Securities vs. Anti-Dilutive
Securities: What's the Difference?
https://www.investopedia.com/ask/answers/102714/what-are-differences-
between-dilutive-securities-and-antidilutive-securities.asp
