Companies issue equity all the time. It is considered a normal part of business. In fact, when equity markets are doing well, CEOs will often push for a rights issue, arguing that the market is over priced and therefore it makes sense to issue new shares and sell them into the market.
That might seem to make sense at first blush. But if a CEO thinks that this makes commercial sense then they are being naive. The only other explanation is that they are less than honest. Let us explore why.
As a first step, why is selling something at a higher than value price incorrect? In general, if it is a non-producing asset, then there is nothing wrong with this. Selling someone a pair of shoes should not cause any issues. The problem lies in what if it is a producing asset?