Warrants in IPOs: Evidence from Hong Kong

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• 作者：Khelifa Mazouz ; Brahim Saadouni ; Shuxing Yin
• 关键词：Initial public offering ; Warrants ; Agency costs ; Signaling
• 刊名：Pacific-Basin Finance Journal
• 出版年：2008
• 出版时间：November 2008
• 年：2008
• 卷：16
• 期：5
• 页码：539-554
• 全文大小：204 K

文摘

We examine whether the Hong Kong Stock Exchange listed firms include warrants in their initial public offerings (IPOs) to signal their quality. We show that IPOs with warrants have higher profitability and better asset utilization rates compared to IPOs without warrants. We also report evidence that after controlling for the level of retained ownership, the proportion of the firm value sold as warrants increases in firm's riskiness. The results from the self-selection model reveal that firms include warrants in their offerings to reduce underpricing relative to what it would have been in the absence of warrants. We conclude that warrants are more likely to be used for signaling purposes rather than as mechanisms to reduce the agency costs of free cash flow.