Long-Run Operating Performance of Indian Firms Offering Seasoned Equity

Abstract

The present study examines the behavior of firms offering seasoned equity duringthe period 1996 to 1999 in India. The long-term operating performance of equityissuers does not support the view that earnings are managed to time the equityofferings. This result contradicts the findings of Rangan (1998) and Teoh et, al(1998). Pre issue period operating performance does not have any impact on thedecision to issue seasoned equity, thus contradicting the view that seasonedofferings are timed to exploit better operating performance. Rather we find thatinformation asymmetry has significant influence on the decision to issue seasonedequity.