This paper empirically tests the transaction cost theory of managerial ownership in the settings of seasoned equity offerings (SEOs) and repurchases. SEOs and repurchases result in changes of managerial ownership due to non-contracting reasons. We use a benchmark specification to obtain the measures of optimal CEO ownership and deviations from the optimum. We find that SEOs and repurchases are associated with a higher (lower) abnormal return if they move CEO ownership towards (away from) the optimal level. The findings are consistent with the transaction cost theory of managerial ownership.