The Association Between Stock Returns And Dilutive Earnings Per Share Numbers: A Reexamination

Abstract

Since 1969 generally accepted accounting principles have required firms with complex capital structure to disclose both primary and fully diluted earnings per share numbers. The purpose of this paper is to investigate whether a hypothesized benchmark, raw (basic) earnings per share, is more associated with stock price movements than these two required dilutive earnings numbers. Results show that the benchmark earnings per share number is more associated with stock returns than either primary or fully-diluted.