Abstract
This article examines the operating performance of firms surrounding Seasoned Equity Offerings (SEOs) and finds that weak operating performance by issuing firms begins during a 2-year period prior to issue. This is in contrast to the stylized facts that a seasoned equity issue initiates a period of weak performance. Our findings suggest instead that an issue is more likely a reaction to a period of weak performance that is already well under way. Consistent with previous studies, we find that weak performance continues after the issue despite the evidence of favourable macroeconomic conditions.
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