While improving the seasoned equity offerings, companies often manipulate the earnings or window the financial statements to get approval and increase IPO prices, and thus acquiring the funds easier. The main focus for this study is to exam whether the firms listed in Taiwan Stock Exchange manipulate earnings through discretionary accruals before the seasoned equity offerings, and the relationship between pre-issue discretionary accruals and the post-issue earnings, operating performance and long-term stock returns. The sample observed consists of 226 firms listed in Taiwan Stock Exchange conducting seasoned equity offering from 1991 to 1998 and the Modified Jones Model was used to estimate the discretionary accruals basing on the financial statements of the year. The discretionary accruals are the main research variables. The empirical results show that: 1. Firms listed in Taiwan Stock Exchange intend to manipulate the discretionary current accruals before conducting the seasoned equity offerings in order to improve earnings, and the larger pre-issue discretionary accruals, the larger the decline of post-issue earnings. 2. The post-issue total asset returns are clearly negatively correlated to the discretionary current accruals in the year before the seasoned equity offerings, indicating that the adjustment of discretionary accruals will influence the post-issue operating performance. 3. Excluding the possible influences from the industry, the discretionary current accruals present significantly negative effect on the post-issue operating performance. The level of earnings management becomes larger, the post-issue long-term stock return will decline greater.