MOTIVATIONS FOR SEASONED EQUITY OFFERINGS AND OPERATING PERFORMANCE OF ISSUING FIRMS IN NIGERIA

Abstract

Background: Equity financing remains a critical source of corporate investment funding, yet evidence on the post-issue operating performance of seasoned equity offering (SEO) firms remains mixed, particularly in emerging markets. Aims: This study examined the determinants of SEO decisions and evaluated post-issue operating performance among non-financial firms in Nigeria. Methods: A dynamic fixed-effects logit regression was employed to analyse the determinants of SEO decisions, while post-issue operating performance was assessed using descriptive statistics and the Wilcoxon Signed-Rank Test. Sample: The study covered 24 non-financial firms listed on the Nigerian Exchange Group over the period 2010-2022. Results: Cash flow returns on assets, leverage, and price-earnings ratio exert significant negative effects on SEO decisions, whereas capital expenditure, market-to-book ratio, and interest rate exert significant positive effects. Post-issue operating performance indicators generally decline following SEOs, with a mild rebound in returns on market value of assets; however, these changes are statistically insignificant. Conclusions: SEO activity in Nigeria is primarily driven by financing needs, capital restructuring, and market timing considerations rather than improvements in operational efficiency. Implications: The findings revealed to managers, investors, and policymakers the need for disciplined capital allocation and stronger performance governance to ensure that equity financing supports long-term firm value creation.