A loss in shareholder value, measured in terms of percentage ownership in the ﬁrm, market value of the ﬁrm, book value of equity, or earnings per share, is known as _______________.

Question

Quizplus · Accepted Answer

A loss of shareholder value due to the issuance of new shares is known as dilution. This occurs when the new shares are issued at a price lower than the current market price, which reduces the value of existing shares. Oversubscription refers to a condition where there are more investors interested in buying shares than there are shares available. Underpricing is the practice of setting an IPO price lower than the market value in order to encourage demand. Rights pricing is a term used for determining the price of rights issue. Down sampling is not related to IPOs or shareholder value.

A Loss in Shareholder Value, Measured in Terms of Percentage