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Diminution in the proportion of income to which each share is entitled. Issing new shares often causes dillution.


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.


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.


  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.
References in periodicals archive ?
Key words: MIC, Extensively drug-resistant Pseudomonas aeruginosa, agar dilution method, broth dilution method
Also, as a follow-up, I will have students look for a journal article in which the researchers have used serial dilutions in their work and ask them to explain why the serial dilutions were beneficial to the experiment.
Observed titres of serum samples were calculated by plotting the average of triplicate, corrected absorbance readings at serial dilutions until the PNT baseline was intersected (Fig.
A table for 10-fold dilutions with five replicate tubes per dilution level is located in Appendix 5.
There was a matrix effect evident in the 100-fold diluted milk samples, so we analyzed the milk samples using a standard curve in the presence of milk at the same 100-fold dilution to accurately ascertain the DA concentrations (data not shown).
Dilution of C2 specimens will theoretically provide a practical and rapid accommodation.
When their symptoms persisted, they underwent further evaluation and treatment based on the results of serial dilution quantitative intradermal skin testing.
Bonding at dilutions ranging from 5 to 35 weight percent solids, or 0.
In healthy individuals, ANA at dilutions 1:40, 1:80, 1:160, 1:320 and 1:640 was positive in 13.
Dilutions were performed manually; each dilution was obtained by diluting the original undiluted specimen rather than by dilutions of dilutions.
Skin endpoint titration (SET) testing, also referred to as serial dilution quantitative intradermal testing, is a modification of intradermal testing that uses specific antigen dilutions to establish the minimum amount of antigen required to produce a positive skin test.