Stock Performance Following Seasoned Stock-Warrant Unit Offerings

32 Pages Posted: 5 Apr 2003 Last revised: 8 Mar 2014

Multiple version iconThere are 2 versions of this paper

Date Written: 2004


Theories suggest that stock-warrant units are used as mechanisms for reducing agency costs or signaling firms' good future prospects as a form of sequential equity financing. While there is evidence of less severe price reaction to unit seasoned equity offering announcements than to share seasoned equity offering announcements, unit offering firms in general underperform not only non-issuing size, book-to-market and prior return matching firms but also similar share offering firms. The same results are found when the long-run performance is measured relative to broad market indices 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 in reducing agency costs or signaling.

Keywords: Unit offering, Seasoned offering, Warrants, Staged Financing, Signaling, Agency costs

JEL Classification: G32

Suggested Citation

Byoun, Soku, Stock Performance Following Seasoned Stock-Warrant Unit Offerings (2004). Journal of Business, Vol. 77, No. 1, 2004. Available at SSRN: or

Soku Byoun (Contact Author)

Baylor University ( email )

Department of Finance Insurance & Real Estate
P.O.Box 98004
Waco, TX 76712
254-710-7849 (Phone)

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