Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Investopedia Says: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. Related Terms: Anti-Dilution Provision Convertible Preferred Stock Convertibles Diluted Earning Per Share - Diluted EPS Employee Stock Option - ESO Full Ratchet Open Offer Outstanding Shares Secondary Offering Wash-Out Round |