Abstract

We document the operating performance of Canadian firms that issue different types of seasoned equity financings (common shares, units, warrants) and initial public offerings in the years prior to and following their issue. The results indicate that the operating performance of public firms that issue equity decline in the years following such issues. This underperformance is more pronounced among firms with smaller market capitalizations. The price to book ratio is not a significant determinant of the change in median operating performance of issuers after issue. The operating performance of issuing firms in the consumer products industry underperforms that of the industrial, natural products, and 'others' industries.