Define: Dilution

UK Accounting Glossary

Definition: Dilution



What is the dictionary definition of Dilution?

Dictionary Definition


  1. The action of the verb dilute.
  2. The process of making something dilute.
  3. A solution that has had additional solvent, such as water, added to it into order to make it less concentrated.

Advertisement



Full Definition of Dilution


Dilution is the reduction of fractional ownership of each of a company’s existing shareholders by the issuance of additional shares. A common method of dilution is the conversion to common stock of other securities, such as convertible bonds or preferred stock. Dilution also occurs when new shares are issued because the company sells more shares to the public, or pays for an acquisition with shares. An anti-dilution clause may allow current shareholders to avoid dilution and preserve their fractional ownership by providing the right to buy a proportional number of shares upon any issuance of new shares to other shareholders. In many states, the anti-dilution clause, or anti-dilution provision, must be in the corporation’s charter to be regarded as valid.


Advertisement




Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/dilution/
Modern Language Association (MLA):
Dilution. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. February 25, 2020 https://payrollheaven.com/define/dilution/.
Chicago Manual of Style (CMS):
Dilution. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/dilution/ (accessed: February 25, 2020).
American Psychological Association (APA):
Dilution. PayrollHeaven.com. Retrieved February 25, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/dilution/

Definition Sources


Definitions for Dilution are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February 2020.