When providing funding for the company, which makes IPO or PO, investors expect the enterprise to post the same earnings growth as it is before the event and even higher as the entity can leverage its growth on the additional funds attracted. However, as the analysis of the Baltic IPOs and POs demonstrates the reality diverges from the investors’ expectations and valuation multiples, being high once public offering is made rapidly decrease. The profitability of the companies declines in the first two years after the funds attraction. The solvency position strengthens right after the event but in the second year it reaches the level of pre-IPO financial stability. One of the reasons to explain this phenomenon of financial underperformance is weak earnings quality before the fund attraction event, which is clearly shown by high level of accruals. Another explaining reason is low motivation of the management to keep company attractive for investors, which can be characteristic trait of developing equity market where investor relations culture is just emerging.