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  In an imperfect capital market,financial constraint may have a strong effect on a firm s cost of external financing.We examine the effects of financial constraint on me underpricing of seasoned equity offers(SEOs).Using the data of Chinese SEOs from 1998 to 2004 and controlling for variables such as risk and price pressure,we show that financial constraint is positively associated with the underpricng of SEOs.The underpricing of Chinese SEO has declined significantly since 2000 due to the change of offering methods.If the offered shares were distributed mostly to new shareholders,the damage of underpricing to the interest of existing shareholders will be reduced.The findings lend some evidence of asymmetric information related to underpricing.……