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Diminution in the proportion of income to which each share is entitled. Issing new shares often causes dillution.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


A decrease in the equity position of a share of stock because of the issuance of additional shares. Dilution is usually detrimental to the position of existing shareholders because it weakens their proportional claim on earnings and assets. See also potential dilution.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


Dilution occurs when a company issues additional shares of stock, and as a result the earnings per share and the book value per share decline.

This happens because earnings per share and book value per share are calculated by dividing the total earnings or book value by the number of existing shares.

The larger the number of shares, the lower the value of each share. Lower earnings per share may trigger a selloff in the stock, lowering its price. That's one reason a company may choose to issue bonds rather than new stock to raise additional capital.

Similarly, if companies merge or one buys another, earnings may be diluted if they don't increase proportionately with the combined number of shares in the newly created company.

Dilution can also occur if warrants and stock options on a stock are exercised, and if convertible bonds and preferred stock the company issued are converted to common stock.

Companies must report the worst-case potential for such dilution, or loss of value, to their shareholders as diluted earnings per share.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


  1. the decrease in control and EARNINGS PER SHARE experienced by existing shareholders in a JOINT-STOCK COMPANY when SHARE ISSUES are made which attract new shareholders. Dilution is a particular problem in fast-growing, family-controlled companies where the need to raise new capital may dilute the founding family's shareholdings to below 50%, causing them to lose potential control of the company.

    In the past, companies have sought to avoid dilution whilst continuing to raise capital by issuing NON-VOTING SHARES; but these are nowadays disapproved of by most STOCK MARKETS.

  2. the weakening of the monopoly of skills of a particular occupational group by the recruitment of less-skilled workers to perform the same work. See SKILL.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
References in periodicals archive ?
In an in vitro setting with healthy dogs, they tested two dilutions of mannitol (12.5% and 6.25%) and found significant effects on EX-CT, EX-CFT, but not on EX-MCF and FIB-MCF for both dilutions.
A concentrated virus suspension along with equal volumes of extract dilutions were incubated at 37AdegC for 60 min.
strain Dilutions 1:1 1:2 1:4 1:8 1:16 1:32 MIC Growth Growth Growth Growth Growth Growth MBC Growth Growth Growth Growth Growth Growth 0.5 ml of *N.B Controls & Extract + Known Extract 0.5ml of 0.5 orgm.
Antitsellullarian immunoglobulin isolated from hyper immune serum of rabbits (Table 6) induced suppression of sensitization processes in cell culture on the 3rd day to 1:340 dilutions on 5th day of growth was recorded for up to 1:380 dilutions and 8-10th day exerts an inhibitory effect was to 1:420 dilution.
If there is agglutination in the tube containing the most dilute serum, an endpoint has not been reached, and it is necessary to prepare and test additional dilutions.
For the high-rise building (Figure 3b) the lowest rooftop dilutions occurred for [theta]= 0[degrees] irrespective of whether or not the RTS was present.
In March 2008, a hydrographic dye dispersion and dilution study using rhodamine WT tracer dye was conducted.
He found that many of his patients had better symptom relief with moderate dosage levels based on his 10-fold dilution technique than was previously observed using the same dilution for each antigen and increasing the dose until reactions were encountered.
Deviations from linearity on dilution are particularly marked for CA 19-9 measurement in certain samples.
In this lab, we will start with an unknown amount of beads and simulate a serial dilution so that you will be able to visualize what is happening and be able to calculate the number of beads in your original sample.
One of the major benefits is being sure that the dilution is done correctly prior to reaching post-analysis Q C and realising that there is a problem.