So, let me pay close attention to you, to see if I can understand the message you're trying to communicate here, as I think there are a number of elements at pl

So, let me pay close attention to you, to see if I can understand the message you're trying to communicate here, as I think there are a number of elements at play. First, I think your example of dilution and it's impact on returns is a good one. Dilution - a nice neutral definition can be found here: http://www.investopedia.com/terms/d/dilution.asp http://www.investopedia.com/terms/d/dilution.asp A reduction in the ownership percentage of a share of stock caused by the issuance of new stock. Dilution can also occur when holders of stock options (such as company employees) or holders of other optionable securities exercise their options. When the number of shares outstanding increases, each existing stockholder will own a smaller, or diluted, percentage of the company, making each share less valuable. Dilution also reduces the value of existing shares by reducing the stock's earnings per share. I sense we were overly focussed on the impact to the balance sheet, and ignoring the impact on share of earnings, so I will grant you that Dilution's impact on EPS (and, eventually share of dividends), is a reason that shareholders might resist Dilution.) But, I think it's important to recognize a couple things. First, issuing shares does not always create downward share price pressure. It's quite often the case (particularly in startups), that an infusion of cash has a significant upwards impact, as the liquidity may now make the company much more valuable. Another good example might be Apple, back in 1997. Microsoft's $150 million got 150,000 shares of stock. That liquidity injection (at a pre-split price of $2.50) gave Apple an important boost at an important time - that I would argue created upward share price pressure. On the flip side - http://www.investopedia.com/articles/stocks/11/dangers-of-stock-dilution.asp http://www.investopedia.com/articles/stocks/11/dangers-of-st... has a nice writeup on how to deal with issues surrounding dilution.