We examine seasoned equity offering (SEO) initial-day returns after controlling for the dilution effect from the SEO discount and new shares offered. Contrary to the existing literature that ignores the effect of dilution, we find that initial-day returns are not consistently positive. Modeling adjusted initial-day returns, we show that dilution-adjusted initial-day returns respond to partial price adjustments reflecting both private and public information. Additional determinants of SEO offer-day returns include lockup length, discount reversal, prior operating performance, and underwriter reputation. Long-run tests reveal that adjusted initial-day returns are not predictive of postissuance long-term performance.