Dilutive effect

Dilutive effect

Result of a transaction that decreases earnings per common share (EPS).

Dilutive Effect

The result of an increase in the number of shares, usually through a new issue. That is, a company may issue more shares to shareholders and other investors, which raises the number of shares outstanding. This decreases the company's earnings per share, which, in turn, can decrease the stock price. See also: Anti-dilution provision.
References in periodicals archive ?
Enhanced disclosures required in the bills include: 1) a discussion of the dilutive effect of stock option plans (written in accordance with something called the "Plain English Handbook"); 2) expanded disclosure of the dilutive effect of stock options on the company's earnings per share number; 3) prominent placement and increased comparability of all stock option-related information; and 4) a summary of stock options granted to the five most highly compensated executive officers, including their outstanding options.
The closing of the transaction is anticipated prior to June 2000, and would have some slight dilutive effect on BroadVision's earnings in the first half of the year 2000, according to a company spokesperson.
The method used to determine the dilutive effect of a convertible security.