If one assumes that a low expected return occurs because a stock is overvalued, then managers should issue stock but not invest in low return activities if they are focused on maximizing the wealth of long-term shareholders.On the other hand, if one assumes that low expected returns are rationally being forecast by investors, then a firm should issue stock and use a lower hurdle rate in choosing its investments, much as the neoclassical model of optimal investing and financing would recommend. The remainder of this chapter discusses securities issuance.In Section 3, the shortrun and long-run reactions to various corporate announcements will be summarized. In Section 4, initial public offerings will be analyzed in detail, with substantial focus on contractual mechanisms.But first, detailed attention is given to firms conducting seasoned equity offerings.