Unit Ipos: The Who, When and Why of Warrant Amendment

Posted: 1 Sep 2003

See all articles by Beverly B. Marshall

Beverly B. Marshall

Auburn University Harbert College of Business

Jacqueline L. Garner

Georgia Institute of Technology - Scheller College of Business

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. Futhermore, 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.

JEL Classification: G32

Suggested Citation

Marshall, Beverly B. and Garner, Jacqueline L., Unit Ipos: The Who, When and Why of Warrant Amendment. Journal of Financial Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=433700

Beverly B. Marshall (Contact Author)

Auburn University Harbert College of Business ( email )

415 Magnolia Ave.
Auburn, AL 36849
United States

Jacqueline L. Garner

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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