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Why do companies include warrants in seasoned equity offerings?

Abstract : We analyze the reasons why companies issue units when they raise additional capital. We find that, in contrast to previous evidence, units are not offered to mitigate the agency conflicts or to signal security mispricing as they are predominantly issued during cold periods, in public rather than in rights offerings, and when the issue is underwritten. In addition, the results indicate that companies choose to offer units to increase their offer price flexibility and to underprice their seasoned equity offering so as to minimize the issue cost and the risk of failure of the issue. These results provide support for the net proceeds maximization hypothesis.
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Contributor : Edith Ginglinger Connect in order to contact the contributor
Submitted on : Wednesday, March 14, 2007 - 3:27:07 PM
Last modification on : Friday, January 14, 2022 - 8:18:02 AM


  • HAL Id : halshs-00136572, version 1



Edith Ginglinger, Jean-François Gajewski, Meziane Lasfer. Why do companies include warrants in seasoned equity offerings?. Journal of Corporate Finance : Contracting, Governance and, 2007, Volume 13 (1), pp.25-42. ⟨halshs-00136572⟩



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