Download or read book The Long-Term Performance of Corporate Bonds (and Stocks) Following Seasoned Equity Offerings written by Allan Eberhart and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Previous studies document negative long-term abnormal stock returns following seasoned equity offering (SEO) issuances, and conclude that markets are inefficient. Other studies, however, argue that these results are a manifestation of risk mismeasurment (i.e., the bad model problem), not market inefficiency. We test the efficient market hypothesis (EMH), and avoid the bad model problem, by examining the long-term performance of our sample firms' bonds and stocks following their SEOs. Our results are inconsistent with the EMH. We also provide evidence that SEOs transfer wealth from shareholders to bondholders because SEOs reduce default risk.