Abstract
The Chinese government strictly regulated seasoned equity offerings (SEOs) by setting profitability thresholds and other administrative requirements. We examine the long-run performance of Chinese listed firms making public offerings from 1998 to 2010. Inconsistent with commonly observed patterns of underperformance in mature markets, we do not find any material evidence of post-SEO underperformance compared with matching benchmarks. In addition, we show that the post-SEO abnormal return has a strong positive association with the prior roe of SEO firms, implying that roe-thresholds based on return on equity can be sound tools to identify SEO firms of high quality.
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