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Unit Ipos: The Who, When, And Why Of Warrant Amendment

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  • Jacqueline L. Garner
  • Beverly B. Marshall

Abstract

Although unit initial public offering (IPO) firms reserve the right to amend the original terms of their warrants, only some choose to extend the exercise period, lower the exercise price, or both. We examine the extent of warrant amendment among unit IPOs and find that the decision to amend is related to the need for cash and is generally employed when share prices are closer to the original warrant exercise prices. Furthermore, extension is less likely when the firm is riskier, whereas higher levels of insider ownership significantly reduce the likelihood that a firm will lower the exercise price.

Suggested Citation

  • Jacqueline L. Garner & Beverly B. Marshall, 2004. "Unit Ipos: The Who, When, And Why Of Warrant Amendment," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 27(2), pages 217-233, June.
    • Handle: RePEc:bla:jfnres:v:27:y:2004:i:2:p:217-233
    DOI: 10.1111/j.1475-6803.2004.t01-1-00080.x
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