American Capital Avoids Loss With Fishy Math

The important thing for investors to remember is that this "restrictive stock" exemption will likely fly out the window next May when the IPO lockup ends. At that point, American Capital will be forced into recording the ECAS investment under Level I methods, which prevent control premiums.

That means if ECAS shares stay where they are or fall further, American Capital could be facing at least $140 million in losses on its income statement in the future.

Another issue altogether is whether a control premium is even justified. Some finance and accounting academics argue that restricted stock is worth less than common stock and deserves a discount because of its illiquidity. So does the control premium offset the restricted stock discount? Hard to say.

Whether this is overly aggressive accounting is a question best left for auditors. But the reality is that the company's economic loss may simply have been delayed due to the peculiarity of accounting rules.