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can someone explain to me why companies dilute their earnings per share?…and do they increase the issue of shares to increase the market value of shares or decrease the market value of shares to attract small investors?
Companies do not dilute their earnings per share. It’s not like you have a whisky in front of you and decide to dilute it by adding an ice cube. The dilution is effected because there are convertible financial instruments in issue which, if converted, will increase the number of equity shares in issue (and sometimes also increase the earnings available for equity)
Companies will very rarely issue shares with a view to affecting the market value. The market operates independently of the companies which are quoted on the market. An issue of shares is invariably done to raise finance. How the market price reacts has nothing at all to do with the company
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