The Use of Stand Alone Warrants as Unique Capital Raising Instruments
28 Pages Posted: 22 Jun 2004
Abstract
This study documents a significant positive announcement effect for a unique capital raising tool, stand alone warrants, in the Australian market. The result is consistent with the models of Schultz (1993) and Mayers (1998) where a warrant is viewed positively by the market. The results of the model developed to analyse the determinants of the announcement effect, support variants of the information asymmetry hypothesis (proxied by major shareholder pre-commitment and issue size).
Keywords: Rights issues, warrant issues, announcement effect
JEL Classification: G14, G32
Suggested Citation: Suggested Citation
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