This paper analyzes whether distressed firms are more likely to issue equity using a large international sample from 32 countries between 1990 to 2016. I find that firms facing financial distress are more likely to conduct equity issues. Moreover, the likelihood of distressed equity issuance is more noticeable as creditor rights are stronger. In particular, when automatic stay is not allowed and managers cannot retain their position during the bankruptcy process, the likelihood of issuing equity by distressed firms rises. Overall, my results suggest that the propensity of equity issues is a function of financial distress and creditor rights, and managers also play an important role in dealing with financial distress. 

JEL Codes : G30, G32, G33
Keywords: Creditor rights, financial distress, equity offerings​