What does dilutive mean?
Dilutive is an adjective describing something that weakens, thins out, or reduces the strength, value, or concentration of another thing. Its most prominent modern use is in corporate finance, where a transaction such as a share issuance, acquisition, or convertible bond is called dilutive if it decreases the ownership percentage or earnings per share of existing shareholders. The word also appears more broadly to describe anything that erodes the purity or effectiveness of something else — for example, a poorly conceived partnership might be described as dilutive to a company's brand. Dilutive carries a mildly negative connotation, since whatever it modifies is understood as diminishing something valued. It is chiefly a term of formal and technical registers, appearing frequently in earnings reports, analyst commentary, and financial journalism, where it is often paired with its opposite, accretive.
adjectiveTending to dilute or reduce the strength, value, or concentration of something; in finance, especially describing an action (such as issuing new shares) that reduces the ownership percentage or earnings per share of existing shareholders.
- Tending to weaken or reduce the concentration or value of something.
- (Finance) Of a share issuance, acquisition, or other transaction: reducing the earnings per share or ownership stake of existing shareholders.
"Analysts warned that the new share offering would be highly dilutive to existing shareholders."
"Critics argued the merger was dilutive to the company's core brand identity."
"The convertible notes proved less dilutive than investors had feared."
In corporate finance, a deal can be accretive or dilutive — and 'dilutive' is the word that makes CEOs nervous, because it means their shareholders just got a smaller slice of the pie.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Etymology of dilutive
Dilutive derives from the Latin verb diluere, meaning 'to wash away' or 'to dissolve', formed from dis- ('apart') plus luere, from lavare ('to wash'). The English adjective was formed by adding the suffix -ive to the past-participle stem of dilute, which entered English in the mid-16th century. It shares this watery root with cognates such as deluge, alluvial, and lavatory, all tracing back to the same Indo-European root for washing. The specialized financial sense developed much later, alongside modern corporate accounting practice.
How dilutive is actually used
Predominantly used in formal and technical contexts — corporate finance, accounting, chemistry, and business journalism. In everyday speech it is rare; 'dilute' is generally preferred outside specialist registers. The antonym 'accretive' is its standard counterpart in financial writing.
Easily confused with dilutive
'Diluted' describes something that has already been reduced in concentration, while 'dilutive' describes something that causes or tends to cause that reduction.