Definition of Claim dilution

Claim dilution

A reduction in the likelihood one or more of the firm's claimants will be fully repaid,
including time value of money considerations.

Claimant

A party to an explicit or implicit contract.

Contingent claim

A claim that can be made only if one or more specified outcomes occur.

Dilution

Diminution in the proportion of income to which each share is entitled.

Disclaimer of opinion

An auditor's statement disclaiming any opinion regarding the company's financial
condition.

Equity claim

Also called a residual claim, a claim to a share of earnings after debt obligation have been
satisfied.

Marketed claims

claims that can be bought and sold in financial markets, such as those of stockholders and
bondholders.

Nonmarketed claims

claims that cannot be easily bought and sold in the financial markets, such as those of
the government and litigants in lawsuits.

Residual claim

Related: equity claim

Unclaimed Pay

Net pay not collected by an employee, which is typically transferred
to the local state government after a mandated interval has passed from
the date of payment.

Preferred Stock Stock that has a claim on assets and dividends of a corporation that are prior

to that of common stock. Preferred stock typically does not carry the right to vote.

Antidilution Provisions

A clause in a shareholders agreement preventing a company from issuing additional shares, without allowing the current shareholders the opportunity to participate in the offering to avoid dilution of their percentage ownership.

Claim

Request for payment of benefits under the terms of an insurance policy.

Claimant

Person or party making request for payment of benefits under the terms of an insurance policy.

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