1 The Performance of Seasoned Equity Issues in a Risk- Adjusted Environment?

We show that firms issuing seasoned equity possess unique risk characteristics as captured by beta. We use a benchmark to control for this risk and then measure the extent of risk-adjusted under-performance using a longer time-frame than the five-year period used in most studies. We examine the impact of various factors on post-issue performance as well as initial issue underpricing. Why do companies making seasoned equity offerings (SEOs) significantly under-perform in the post-issue period? Loughran and Ritter (1997) suggested transitory over-pricing prior to issue, or agency and information costs, Healy and Palepu (1990) and Masulis and Korwar (1986). Ranga