2007
DOI: 10.1016/j.jcorpfin.2006.05.001
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Why do companies include warrants in seasoned equity offerings?

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Cited by 15 publications
(7 citation statements)
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“…Denis (1994) states that investment opportunities appear to play a small role in determining the market's reaction to SEO announcements. Using a sample of French SEOs, Gajewski et al (2007) find that firms issuing warrants in conjunction with shares do not appear to do so to reduce agency costs. Jung et al (1996) find more persuasive evidence that agency issues are important in SEOs.…”
Section: Discussionmentioning
confidence: 97%
“…Denis (1994) states that investment opportunities appear to play a small role in determining the market's reaction to SEO announcements. Using a sample of French SEOs, Gajewski et al (2007) find that firms issuing warrants in conjunction with shares do not appear to do so to reduce agency costs. Jung et al (1996) find more persuasive evidence that agency issues are important in SEOs.…”
Section: Discussionmentioning
confidence: 97%
“…Signaling theory has also been applied to explain the effect of ownership structure on firm value (Certo et al, 2001;Leland & Pyle, 1977) and the association between financial decisions and firm value (Chemmanur & Fulghieru, 1997;Connelly et al, 2011;Welch, 1996). In general, previous studies applying signaling theory to examine the association between the above factors and firm value, often employ firm leverage as a medium for the (signaling) channel (Gajewski, Ginglinger & Lasfer, 2007). More specifically, debt can be considered a signal: it has shown a positive relationship with firm value -increase in stock price in developed economies -due to the monitoring abilities of lenders ( James, 1987;Lummer & McConnell, 1989).…”
Section: The Signaling Effect Of State Ownership On the Performance-vmentioning
confidence: 99%
“…Their model predicts that underpricing in IPOs will be greater for firms with higher risk, ceteris paribus. Gajewski et al (2007) find that the underpricing in French SEOs is stronger for units than for equity issuance, irrespective of the issuance method. Chollet and Ginglinger (2001) show that the underpricing is positively related with firm riskiness for unit offerings via public offerings in France.…”
Section: Agency Costs Hypothesismentioning
confidence: 71%
“…Furthermore, the level of discount is significantly lower for RUs than for REs. However, when we calculate the underpricing by incorporating the value of warrants issued consistent with Gajewski et al (2007), we find that underpricing is stronger for RUs and RWs than for REs.…”
Section: Methodsmentioning
confidence: 91%
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