UNDERPERFORMANCE IN LONG-RUN STOCK RETURNS FOLLOWING SEASONED EQUITY OFFERINGS

We document that firms making seasoned equity offerings during 1975-19 89 substantially underperformed a sample of matched firms from the sam e industry and of similar size that did not issue equity. This underpe rformance persists even after controlling for trading system, offer si ze, and the issuing firm's age and book-to-market ratio. It is similar to that previously documented for initial public offerings, suggestin g that managers take advantage of overvaluation in both the initial an d seasoned equity offering markets.