Issuing shares vs. Share Dividends: Why no time-weighing the shares in the latter (for EPS calculations)?

CFA Level I
#1

Company A:

100 Million shares on Jan 1, 2011.

Issues 10 Million Shares on July 1, 2011.

Still has 110 Million shares on Dec 31, 2011.

Company B:

100 Million shares on Jan 1, 2011.

Issues 10% Share Dividend on July 1, 2011, giving it a total of 110 Million Shares

Still has 110 Million shares on Dec 31, 2011.

So why do we use 110 Mil shares in the EPS calculation for Company B instead of 105 (as with Company A)? The shares from the dividend were only around for 1/2 of the year just like the shares issued by Company A!

#2

Because the increase in Company B’s outstanding shares resulted from a stock dividend, as opposed to newly issued shares. For stock dividends (and stock splits as well) you have to assume that the additional shares have been outstanding since the original shares. So the additional 10% is assumed to have been outstanding since Jan 1, 2011 (same date as the original 100M shares).