Seasoned equity offerings and payout policy.

We investigate firms that issue seasoned equity following a period of payouts to equity holders. Firms that engage in this roundtrip of equity exhibit strong growth in investment in capital expenditures. Issuing seasoned equity for payout firms does not appear to be associated with future declines in operating cash flow, but rather is associated more with large absolute increases in future cash flow. These firms tend to issue equity when their equity valuations are high, suggesting that market conditions matter. Our findings are consistent with firms issuing equity to use the capital for valuable investments in fixed assets, consistent with market assessments of growth opportunities. [ABSTRACT FROM AUTHOR]