• earnings management;
  • secondary equity offering;
  • value relevance;
  • discretionary accruals;
  • voluntary disclosure

This study investigates whether opportunistic earnings management affects the value relevance of net income and book value in determining stock price. We document a decrease in the value relevance of earnings in the year of an equity offering for a group of firms with ex post evidence of earnings management. This decrease is greater for the discretionary component of earnings than for the non-discretionary component. These results are robust to model specification and the type of offering. However, the results are sensitive to firms’ disclosure activity prior to the offering.