Using data for 518 seasoned equity offerings during 2003 to 2015, it is argued that equity market performance of SEOs declines significantly post issue, compared to peer firms. This is particularly true for SEOs issued during market upswings and more so for follow-on public offers or FPOs where money is raised from external shareholders. Evidence suggests that this declining equity performance is mainly due to the deterioration in operating performance after such an issue. Further, firms with more available free cash flows and greater perceived growth opportunities show higher declines, while larger firms and those with higher pre-existing leverage with more monitoring, register lower declines in performance. Indian firms on average tend to “time” the market, take advantage of information asymmetry to raise SEO money during boom years and mostly engage in value-destroying activities, while a few big-ticket SEOs issued and subscribed during market downturns are the only outliers to this generally gloomy performance scenario.
