BROWSE

Watered Stock

Definition

Watered stock is an asset with an artificially-inflated value. The term is most commonly used to refer to a form of securities fraud common under older corporate laws that placed a heavy emphasis upon the par value of stock.

What is 'Watered Stock'

Stock that is issued with a value much greater than the value of the issuing company's assets. Watered stock can be caused by excessive stock dividends, overvalued assets and/or large operating losses.

Explaining 'Watered Stock'

Assets can be overvalued for several reasons, including inflated accounting values or excessive issue of stock (through a dividend or employee stock-option program). This term is thought to originate from ranchers who would feed their cattle large amounts of water before market day to make them heavier, fetching a price higher than their worth.


Further Reading


The stock watering debate: more light, less heat
www.tandfonline.com [PDF]
… Page 7. The Stock Watering Debate: More Light, Less Heat 429 … "Defense of Watered-Stock: Professor Veblen of the University of … "Duties and Responsibilities of the Public Accountant with Regard to New Issues of Stocks and Bonds." Journal of Accountancy I, 1905, 16-27 …

The success of industrial mergersThe success of industrial mergers
academic.oup.com [PDF]
… Page 7. The Stock Watering Debate: More Light, Less Heat 429 … "Defense of Watered-Stock: Professor Veblen of the University of … "Duties and Responsibilities of the Public Accountant with Regard to New Issues of Stocks and Bonds." Journal of Accountancy I, 1905, 16-27 …

The role of stock dividends in defining income, developing capital market research and exploring the economic consequences of accounting policy decisionsThe role of stock dividends in defining income, developing capital market research and exploring the economic consequences of accounting policy decisions
meridian.allenpress.com [PDF]
… Page 7. The Stock Watering Debate: More Light, Less Heat 429 … "Defense of Watered-Stock: Professor Veblen of the University of … "Duties and Responsibilities of the Public Accountant with Regard to New Issues of Stocks and Bonds." Journal of Accountancy I, 1905, 16-27 …

Inflated Corporate Capitalizations and Diluted Property RightsInflated Corporate Capitalizations and Diluted Property Rights
heinonline.org [PDF]
… Page 7. The Stock Watering Debate: More Light, Less Heat 429 … "Defense of Watered-Stock: Professor Veblen of the University of … "Duties and Responsibilities of the Public Accountant with Regard to New Issues of Stocks and Bonds." Journal of Accountancy I, 1905, 16-27 …

Financial disclosure on the internet and overvalued equity: the case of IranFinancial disclosure on the internet and overvalued equity: the case of Iran
www.inderscienceonline.com [PDF]
… Page 7. The Stock Watering Debate: More Light, Less Heat 429 … "Defense of Watered-Stock: Professor Veblen of the University of … "Duties and Responsibilities of the Public Accountant with Regard to New Issues of Stocks and Bonds." Journal of Accountancy I, 1905, 16-27 …

Regulation of Stock Trading: Private Exchanges vs. Government Agencies-CommentaryRegulation of Stock Trading: Private Exchanges vs. Government Agencies-Commentary
heinonline.org [PDF]
… Page 7. The Stock Watering Debate: More Light, Less Heat 429 … "Defense of Watered-Stock: Professor Veblen of the University of … "Duties and Responsibilities of the Public Accountant with Regard to New Issues of Stocks and Bonds." Journal of Accountancy I, 1905, 16-27 …


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