IDEAS home Printed from https://ideas.repec.org/a/fma/fmanag/aldersonbetker03.html
   My bibliography  Save this article

Managerial Discretion Costs and the Acquisition of Capital: Evidence from Forced Warrant Exercise

Author

Listed:
  • Michael J. Alderson
  • Brian L. Betker

Abstract

Forced warrant exercise should elicit a stock price reaction only in response to inventory adjustments or unanticipated increases in agency costs. We find evidence of both effects. Firms calling warrants for redemption experience negative abnormal returns on the announcement date. Negative returns are concentrated among firms whose characteristics suggest that the call should have been deferred. We find lower announcement returns among inefficient firms with low leverage-firms for which the agency costs of managerial discretion may be high. All else equal, announcement returns are lower among inefficient firms that invested heavily in the year after forced exercise.

Suggested Citation

  • Michael J. Alderson & Brian L. Betker, 2003. "Managerial Discretion Costs and the Acquisition of Capital: Evidence from Forced Warrant Exercise," Financial Management, Financial Management Association, vol. 32(1), Spring.
    • Handle: RePEc:fma:fmanag:aldersonbetker03
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David R. King & Gang Wang & Mehdi Samimi & Andres Felipe Cortes, 2021. "A Meta‐Analytic Integration of Acquisition Performance Prediction," Journal of Management Studies, Wiley Blackwell, vol. 58(5), pages 1198-1236, July.
    2. repec:bla:finmgt:v:36:y:2007:i:2:p:1-21:1 is not listed on IDEAS

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fma:fmanag:aldersonbetker03. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Courtney Connors (email available below). General contact details of provider: https://edirc.repec.org/data/fmaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.