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Stock Performance following Seasoned Stock-Warrant Unit Offerings

Author

Listed:
  • Soku Byoun

    (Baylor University)

Abstract

Theories suggest that stock-warrant units are used as mechanisms for reducing agency costs or signaling as a form of sequential equity financing. While there is evidence of less severe price reaction to unit offering announcements, unit offering firms underperform not only nonissuing matching firms but also similar share offering firms. The same results are found when the long-run performance is measured relative to broad market indexes or measured by the three-factor or four-factor model. These findings are not consistent with the theories suggested for the roles of unit financing.

Suggested Citation

  • Soku Byoun, 2004. "Stock Performance following Seasoned Stock-Warrant Unit Offerings," The Journal of Business, University of Chicago Press, vol. 77(1), pages 75-100, January.
    • Handle: RePEc:ucp:jnlbus:v:77:y:2004:i:1:p:75-100
    DOI: 10.1086/379862
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    Cited by:

    1. James R. Barth & Min Gu & Jiachen Liu, 2023. "SPACs: An overview and assessment of returns," American Journal of Economics and Sociology, Wiley Blackwell, vol. 82(2), pages 129-139, March.
    2. Mazouz, Khelifa & Saadouni, Brahim & Yin, Shuxing, 2008. "The long-term performance of Hong Kong share-only and unit initial public offerings (IPOs)," Journal of Multinational Financial Management, Elsevier, vol. 18(3), pages 209-228, July.
    3. Saeed Md. Abdullah & Simon Zaby, 2021. "Seasoned Equity Offerings and Differences in Share-Price Impact by Firm Categories," IJFS, MDPI, vol. 9(3), pages 1-10, July.
    4. Hyuna Park, 2022. "Warrants in the financial management decisions of innovative firms," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(2), pages 276-295, February.
    5. repec:dau:papers:123456789/2917 is not listed on IDEAS
    6. Sung C. Bae & Kiyoung Chang & Hoje Jo, 2013. "Long-Run Stock and Operating Performance of Underwriter Warrants: Evidence from Seasoned Equity Offerings," International Review of Finance, International Review of Finance Ltd., vol. 13(4), pages 473-501, December.
    7. Gajewski, Jean-Francois & Ginglinger, Edith & Lasfer, Meziane, 2007. "Why do companies include warrants in seasoned equity offerings?," Journal of Corporate Finance, Elsevier, vol. 13(1), pages 25-42, March.
    8. Ronald Bremer & Bonnie Buchanan & Philip English, 2011. "The advantages of using quarterly returns for long-term event studies," Review of Quantitative Finance and Accounting, Springer, vol. 36(4), pages 491-516, May.
    9. Sabri Boubaker & Hatem Mansali, 2022. "The long-run performance of seasoned stock-warrant unit offerings," Economics Bulletin, AccessEcon, vol. 42(2), pages 609-628.
    10. Balasingham Balachandran & Sutharson Kanapathippillai & Chandrasekhar Krishnamurti & Michael Theobald & Eswaran Velayutham, 2017. "The issuance of warrants in rights offerings: Agency costs and signaling effects," Australian Journal of Management, Australian School of Business, vol. 42(4), pages 608-636, November.

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