Japan SEOs Before the Lost Decade: A Long-Run Stock Performance

This paper analyzes the long-run performance of 427 issues or 387 Japanese firms that made Seasoned Equity Offerings (SEO) from 1980-1990. We find that as opposed to U.S. SEO’s that concentrate on either growth firms (low book-to-market) or small firms, Japanese SEO’s under our study period concentrated on large firms. We employ different methodologies and find that performance evaluation is sensitive to the ways the tests are done. We find that holding-period-return of the value weighted portfolio of SEOs outperform three out of four benchmarks. Our results support the notion that underperformance of issuing firms widely documented is not robust under different methodologies.