Abstract
We examine changes in operating performance for a large sample of industrial firms conducting seasoned equity offerings (SEOs). Our sample of SEO firms has significant improvements in operating performance prior to the issue. The SEO firms experience a sharp, statistically significant decrease in profitability following the SEO in both industry-adjusted and unadjusted comparisons. We find that the decline in profitability is greater for firms that have higher free cash flow, and that SEO firms that invest in new fixed assets perform better than SEO firms that do not.
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