We investigate the financing strategies and valuation effects of 247 IPO firms at the `Neuer Markt' in Germany that either issued additional equity (SEO) or repurchased shares (SRP) within five years after going public. IPOs issuing additional equity exhibit a temporary outperformance before the event, but negative announcement returns and a long-run underperformance. In contrast, repurchasing IPOs experience positive announcement returns and no long-run underperformance. Free cash flow problem resulting from mandatory equity issuance at the IPO explain the SRP decision. Our findings for SEOs are consistent with a staged financing strategy, while we find no evidence for market timing.