The leading explanation for the post-issue long-run stock return underperformace of seasoned equity offering firms is that investors have optimistic expectations regarding future earnings and the underperformance occures as these expectations are corrected over time. To directly test this hypothessis, we examine investors' reaction to quarterly earnings announcements over a five-year period following the offering for a large sample of seasoned equity issuing firms. In general, our evidence suggests that investorsare not disappointed by earnings announcements that follow seasoned equity offerings. This result is not sensitive to widening the windown over which earnings announcement returns are computed. This result also holds true for subsets of equity issuing firms. The choice fo these three subsets is predicated by extant evidence that these firms are likely to convey relatively more unfavorable information throung their earnings announcements. Overall, our findings are inconsistent with the optimistic expectations hypotgesis.