Serial SEOs and capital structure

This study investigates whether a firm’s serial seasoned equity offerings (SEOs) have an impact on its capital structure that is distinct from that of a single SEO firm. Serial SEOs are pervasive in our sample of 1,033 UK public firms listed on the London markets. Some two thirds are serial SEO issuers—or have made more than one such issue—during the 1995–2015 sample period. Our findings show that that serial SEO firms have higher leverage ratios than single issuers, implying that the additional equity funds are not used to pay down debt. Moreover, they indicate that serial issuer cash holdings are sensitive to debt changes, but this is not the case with single issuers. Our findings highlight that serial SEO issue activity is an important determinant of changes in debt and cash holdings.