| Since 1998, the seasoned equity offering (SEO) has developed rapidly. It has already become one of important ways to re-financing in Chinese stock market. And after SEO, the operating performance of listed enterprises is also a hot topic which the public pay attention to. Many domestic and foreign related researches are developed, but we always do not have a consistent explanation about operating performance change and their reasons. Around this background, we discover the possible reasons that influence operating performance change.Free cash flow in modern enterprises is under the control of managers, and managers have the opportunity and motive for committing resources to bring those who give their own private benefits at the expense of investment projects among the company's value. After the SEO, listed companies have got a lot of free cash flow. Due to the existence of principal-agent costs, management may use the additional funds raised to over-investment, and lead to the decline in operating performance after SEO, of a listed company.Firstly, this paper builds an integrated function of the company's growth opportunities to measure the existence of a listed companies'over-investment after SEO. And it found out that the majority of listed companies over-invest after the SEO . Those companies who get additional funds are more prone to over-invest .The degree of over-investment have a positive correlation with the amount of those funds raised. Finally it confirms that over-investment after the company's SEO has led to the decline in operating performance. This conclusion supports the hypothesis of over-investment.The research result of this article gives us a good theory instruction about how to improve the effects of SEO. This is not only good to the improvement to companies' management benefits, but also good to the development of Chinese stork market. Therefore, this paper has both good theory value and practical significance. |
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