What question did this study set out to answer?

To evaluate the deficiencies of the MTS method in calculating diluted EPS when warrants are present.

Contingent Equity and the Dilutive Effect on EPS.

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This analysis examines how the MTS method impacts diluted EPS, indicating potential manipulation risks.

To evaluate the deficiencies of the MTS method in calculating diluted EPS when warrants are present.
Analysis of the modified treasury stocks method in context of APB Opinion No. 15
Examination of default assumptions regarding fund usage from warrant exercises
Investigation of conditions affecting dilutive effects
Identified two key deficiencies in the MTS method
Dilutive effects can be reduced or nullified in specific conditions
Potential for managerial manipulation of diluted EPS figures

Benzion Barlev (1983) studied this question.

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