This paper studies how firms manage liquidity around seasoned equity offerings and the impact of such behaviour on long run performance. We identify a pre-issue ‘debt trap' scenario where issuers raise equity to escape from the debt trap problem. We find some evidence that issuers with a debt...

McVay (2006) shows that managers can raise reported core (pro-forma) earnings by shifting core expenses to special items. While the bulk of the literature (e.g. Teoh, Welch, and Wong, 1998; Cohen and Zarowin, 2010) has exclusively focused on accrual- and real activities-based earnings manipulation...

We investigate firms' liquidity practices around seasoned equity offerings (SEOs). We broadly classify issuers on the basis of whether the firm belongs to an industry deemed to be financially constrained or unconstrained. We find that constrained-industry issuers tend to save more cash to...